Economic inequality set to widen in Bangladesh in the short-term: World Bank

• Inflation, stagnant wages erode household purchasing power
• Gini index rises, inequality gap widening
• Twenty lakh more people falling into poverty
• Primary education equity improves, secondary lags

Economic inequality is set to widen in Bangladesh in the short-term, as persistent inflation, stagnant wages, and declining household purchasing power push poorer families further from economic security, according to new estimates from the World Bank.

The Gini index or coefficient, a key measure of inequality, is climbing steadily from 2022 through 2025, underscoring a growing divide between richer and poorer households.

According to the WB report, released Tuesday in Dhaka as part of the Poverty & Equity Assessment 2025, both income inequality and the prosperity gap, which measures how far people are from a decent standard of living, are expected to increase, signalling heightened stress among low- and middle-income groups.

While inequality in household consumption has remained broadly stable nationally, regional trends diverged. In rural areas, disparities in consumption fell slightly, with the Gini index declining from 29.2 to 28.2, whereas in urban centres it rose from 33.1 to 34.5, indicating growing gaps in city living standards.

The Gini index is measured on a scale of 0 to 100, where 0 represents perfect equality and 100 signifies perfect inequality.

Meanwhile, income inequality, which includes earnings, remittances, and returns on assets, worsened, with the Gini index rising from 51 to 54 points, states the WB report.

The report comes at a time when Bangladesh has already been grappling with deepening inequality over the past two decades. It warns that the trend is now accelerating as economic pressures mount.

Bangladesh's upward movement on the Gini scale suggests that the benefits of growth are increasingly concentrated among higher-income households.

Since 2016, consumption growth has become less pro-poor, with gains concentrated among middle- and upper-income groups while the poorest households have benefited least.

The World Bank estimates that nearly 20 lakh additional people will fall into poverty in 2025, pushing the national poverty rate above 21 percent. Since 2022, around 60 lakh people have fallen into poverty, with the poverty gap projected to widen by two points by the end of this year, signalling deeper deprivation among the poor.

Impacts have been uneven: since 2022, households with high-skilled workers, those in quality jobs, and remittance recipients have largely been insulated from the downturn, in some cases maintaining or even improving their welfare.

"This divergence in household welfare is anticipated to increase inequality by nearly 2 Gini points by 2025," said the WB report.

However, the assessment also highlights improvements in educational equity. The influence of inherited circumstances, such as gender, place of birth, and ethnicity, on years of formal education has declined sharply, from explaining 50 percent of inequality among those born in the early 1960s to 20 percent among those born in the 1990s.

This progress is largely due to the expansion of primary education, which has reached most children regardless of background, and gender- and geography-based disparities have nearly disappeared. Similarly, the gap has been shrinking over generations, showing convergence for those born in the late 1970s and for younger cohorts.

The report cautions, however, that gains in secondary education have been less egalitarian. While enrolment has increased at all levels due to policies implemented since the 2000s, inherited circumstances continue to influence access to upper secondary education, meaning inequality remains more pronounced beyond the primary level.