Above Poverty, Below Security: Bangladesh’s Missing Middle

For decades, Bangladesh’s development story has been told through one powerful measure: how many people have escaped poverty. Perhaps it is time to ask another question: how many can afford not to fall back? That distinction matters. Crossing the poverty line is not the same as crossing into economic security. Between poverty and financial security lies a large and diverse group of Bangladeshis who may have regular incomes, education and many features associated with a middle-income lifestyle, yet remain one serious illness, lost job or economic shock away from financial distress.
Bangladesh’s progress against poverty has been substantial. Between 2010 and 2022, the moderate poverty rate fell from 37.1 per cent to 18.7 per cent, according to the World Bank. More recently, however, the direction has changed. The World Bank estimates that poverty rose to 21.4 per cent in 2025, with about 1.4 million additional people falling into poverty that year. More revealing is what lies immediately above the poverty line. Nearly 62 million Bangladeshis, roughly one-third of the population, are estimated to remain vulnerable to falling into poverty following illness, disaster or another economic shock. These 62 million people should not all be labelled “middle class”. Rather, they reveal a neglected space in Bangladesh’s development debate: people who are above poverty but have not yet achieved durable economic security.
Inflation has made this vulnerability more visible. Bangladesh Bureau of Statistics data showed point-to-point inflation at 8.26 per cent in August 2026, with non-food inflation at 9.32 per cent, while wage growth stood at 8.05 per cent. Lower inflation does not mean lower prices. It means prices are rising more slowly. For households whose incomes have not kept pace with accumulated increases in living costs, the squeeze remains. Rent, electricity, transport, school fees, private tuition, healthcare and support for elderly parents can absorb much of a household budget. A family may earn more taka than several years ago while having less capacity to save or absorb an emergency. This exposes an important difference between income and economic resilience. Two households earning similar incomes may have very different levels of security depending on their savings, debt, housing costs, dependants and access to affordable healthcare and education. 
Healthcare is perhaps the clearest example. Bangladesh continues to rely heavily on out-of-pocket health spending. For a household with limited savings, a serious illness can quickly turn a health crisis into a financial crisis. The family may still appear above the poverty line on paper while exhausting savings, borrowing money or selling assets to pay for treatment. Employment presents a similar risk. Bangladesh needs opportunities for close to two million young people entering the labour market each year. Yet the World Bank has reported stagnation in manufacturing job creation and estimates that half of employed young people aged 15 to 29 are in low-paying jobs. Educated young women face particularly difficult employment prospects.
This challenges a long-standing route to upward mobility: education leading to secure employment and greater financial stability. Bangladeshi families invest heavily in their children’s education, often over many years. When graduates face unemployment, underemployment or low-productivity work, education alone cannot provide the economic security families expected from that investment.
The larger issue, therefore, is not simply a temporary cost-of-living crisis. It is the risk of downward mobility. Bangladesh’s policy framework has understandably concentrated on reducing poverty, with social protection largely targeting people already identified as poor or vulnerable. But economic insecurity often begins before someone crosses the poverty line. A worker loses a job before becoming officially poor. A family exhausts its savings on medical treatment before appearing in poverty statistics. Parents cut education expenses before household income falls below an official threshold. By the time such families appear in poverty data, significant damage may already have occurred.
Bangladesh therefore needs to complement poverty reduction with poverty prevention. The objective should remain helping people escape poverty, while also reducing the likelihood that temporary shocks push them back. This does not mean universal cash allowances for everyone who considers themselves middle class. Bangladesh has limited fiscal space, with its tax-to-GDP ratio remaining among the lowest in the world. Policy should instead concentrate on the shocks most likely to destabilise otherwise self-reliant households.
Three areas deserve attention. First: households need better protection against shocks. Affordable public healthcare and financial protection against major medical expenses could reduce the risk of illness pushing families into poverty, while better public education could reduce reliance on costly private alternatives. Social protection should also provide timely, temporary support following unemployment, serious illness, disability, disaster or loss of the main income earner, preventing short-term hardship from becoming chronic poverty. Second: economic security requires productive, adequately paid jobs. Small and medium enterprises need conditions to expand employment, while skills development should better match labour-market demand. Greater female employment, higher-productivity industries and opportunities beyond major cities could further strengthen stable livelihoods. Third: policy should look beyond income and poverty status to household resilience. Savings, insurance, affordable essential services and the ability to recover from shocks are equally important to making development gains last.
This discussion is especially timely as Bangladesh approaches its scheduled graduation from the United Nations’ least developed country category. Graduation represents decades of national progress. But national development indicators and household economic security do not always move at the same pace. A country can cross an international development threshold while millions of its citizens remain financially fragile. That does not diminish Bangladesh’s achievements. It points to the next stage of them. For decades, the development challenge was to help millions of Bangladeshis climb the economic ladder. Increasingly, the question is whether the rung they have reached is secure. Development cannot be considered durable when families escape poverty but remain one illness, one lost job or one disaster away from falling back. Bangladesh’s next challenge is therefore not simply to move more people above the poverty line. It is to make sure that, once they get there, they can stay there.
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The writer is an academician and development strategist, currently serving at a foreign diplomatic mission in Dhaka. He can be reached at [email protected]