The outcome of the un-democratic elections in Bangladesh are sure to wreak havoc on the country’s $22bn clothing industry, which accounts for 80% of exports. The impoverished nation of 160 million has incredible economic potential, but because it relies on FDI, the reaction caused by illegitimate elections – as well as the instability of a party that insists on ruling without mandate — are endangering this potential, and threaten to catapult Bangladesh backwards.
Bangladesh had been making huge economic strides before the period leading up to the polls – according to one investment report; Bangladesh came in second place in South Asia in drawing FDI in 2012. The “World Investment Report” of the UNCTAD said that foreign investment in 2012 for Bangladesh amounted to $1.29 billion, which was 13.75 percent more than in 2011. However, the political and social unrest of 2013 has dealt a severe blow to the economy. After months of violence and bloodshed, and with an illegitimate government in power, international market confidence in the country continues to deteriorate.
Already, macroeconomic indicators are demonstrating the negative impact of the political unrest on the country’s economy. During the July-October period of last year, only $538 million in Foreign Direct Investment was made in Bangladesh, a paltry $7 million increase compared to the same period in the prior fiscal year.
In the last six months of 2013, overseas jobs and remittances also dipped significantly, inflation has increased, and private sector credit growth dropped. Sheikh Hasina has promised to crackdown on ‘terrorist activities’ now that she has been “re-elected”; this will almost certainly mean increased violence in the months to come – violence which will continue to wear away at the country’s hard-won economic progress.
