Poverty rises, middle class squeezed: PPRC

A new study by the Power and Participation Research Centre (PPRC) found poverty is rising again in Bangladesh, the middle class is becoming increasingly vulnerable, and households are running out of ways to cope with mounting economic pressures.

The study found that moderate poverty climbed to 27.9% in 2025 from 18.7% in 2022, while extreme poverty rose to 9.35% from 5.6% over the same period.

The findings were unveiled on Saturday at the launch of PPRC’s flagship publication, State of the Real Economy: Dynamics of Reversals and Resilience in Bangladesh, at the CIRDAP Auditorium in Dhaka.

The publication, co-edited by Dr Hossain Zillur Rahman and Namira Shameem, paints a troubling picture of an economy grappling with rising poverty, widening inequality, stagnant investment and slowing growth.

Dr Hossain Zillur Rahman said PPRC’s findings were consistent with those of the World Bank, pointing to a reversal in poverty reduction and growing vulnerability among middle-income households.

According to PPRC’s nationally representative survey, inequality has also worsened, with the expenditure Gini coefficient reaching 0.436.

Nearly 18% of households, representing around 31 million people, fall into what the study describes as the “fragile middle” – those living between the poverty line and the median income level.

These households remain at risk of falling into poverty because of stagnant incomes, rising living costs and economic shocks.

The study also found that half of all households have at least one chronically ill member, forcing families to bear recurring expenses for medicines and healthcare.

Drawing on household survey findings alongside broader economic trends, PPRC warned that Bangladesh’s economic difficulties go beyond external shocks and reflect a deeper structural trap of rising poverty, weak investment and sluggish growth.

Speaking at the event, World Bank Country Director Jean Pesme said Bangladesh’s overarching economic challenge required urgent structural transformation in trade, public finance and energy efficiency.

He stressed the need to better align education and labour market skills with private-sector demand to restore business confidence and generate employment.

Prof Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD), said income inequality in Bangladesh had more than doubled, while economic growth was lifting people out of poverty more slowly than in other South Asian countries.FBCCI Administrator Md Fazlul Hoque said Bangladesh had failed to develop major export sectors beyond ready-made garments over the past two decades.

The country’s dependence on garment exports had increased from around 73%-75% to 84%-85%, he said.

Fazlul Hoque also warned that academic degrees no longer guaranteed employment, while younger generations were increasingly unwilling to tolerate bureaucratic delays.

Generation Z would not accept having to visit government offices 30-40 times to obtain a routine permit, he said.

Farah Kabir, country director of ActionAid Bangladesh, said informal workers were struggling with rising food prices and the absence of minimum wage protection.

With women’s employment in the garment sector declining, she called for alternative employment opportunities in agroecology, childcare facilities and greater investment that takes gender-specific needs into account.

Dr Hossain Zillur Rahman urged policymakers to recognise the structural trap created by household financial distress, stagnant investment and unreformed institutions.

He proposed a comprehensive transition compact built around five pillars: economic democracy, new growth drivers, quality education, productivity transformation and governance reforms focused on speed and results.

He also stressed the need to assess the state’s failures through people’s everyday experiences.

He described “hoirani”, or harassment, as a pervasive problem across government institutions and governance systems that drains people’s energy, undermines initiative and weakens their aspirations.

Creating an economic and political governance system free from harassment must therefore be central to structural reforms, he said.