Bangladesh, a key player in the global fast fashion industry, is facing major economic troubles, the BBC reports. The country’s garment industry, which makes up $55 billion of its economy and supplies clothes to big brands like H&M and Zara, has transformed Bangladesh from one of the poorest nations to a lower-middle-income country over the past 30 years.
However, recent unrest has caused significant disruptions. Protests led to the ousting of Prime Minister Sheikh Hasina in August, and hundreds of people were killed. The chaos included factory fires and a nationwide internet blackout, which forced some big brands, including Disney and Walmart, to look for other sources for their next season’s clothes. Worker protests have also led to the closure of around 60 factories outside Dhaka, with demands for better wages.
The BBC notes that the recent unrest could decrease exports by 10-20% this year, as political instability shakes confidence in Bangladesh’s garment sector. The country’s economy was already struggling before these events, with issues like child labor scandals, deadly factory accidents, and the impact of COVID-19 taking their toll. Rising prices and declining demand for exports have weakened foreign currency reserves, and excessive spending on infrastructure projects and cronyism have further strained the economy.
Dr. Ahsan Mansur, Bangladesh’s new central bank governor, told the BBC that fixing these issues will take years and that the country may need additional financial support, including another IMF bailout. He emphasized the need for more stability and financial cushion to manage the situation.
Meanwhile, workers in the garment sector are still paid well below the minimum wage, which has led to widespread protests. Many workers, struggling to survive on insufficient wages, joined these protests demanding better pay and working conditions. Student protesters, frustrated with a lack of job opportunities, also joined in, calling for significant changes to the job market.
Dr. Fahmida Khatun from the Centre for Policy Dialogue suggests that diversifying the economy away from reliance on garment production is crucial for meeting the needs of educated youth and strengthening the economy. However, past attempts at diversification have failed to materialize into real change.
A disused technology park near Dhaka, intended to create higher-paying jobs and reduce reliance on garment production, highlights the gap between industry needs and government efforts. Russel T Ahmed, a software entrepreneur, criticized the lack of focus on developing human infrastructure, which he believes is crucial for economic growth.
The new government, led by interim leader Muhammad Yunus, faces a monumental task. Yunus, known for his work in micro-loans, has promised to bring significant reforms to fix the economy, address corruption, and encourage investment. He must also tackle other challenges such as slowing global demand, deteriorating relations with India, and the impact of climate change.
Credit : BBC
https://www.bbc.com/news/articles/cd6ye3e8x9po