Former Prime Minister of Bangladesh Sheikh Hasina resigned and left the country on August 5 2024. Hasina who oversaw a harsh crackdown on violent student protests that claimed over 300 lives between June 7 and August 5 2024, was reportedly given a 45-minute ultimatum by her military leadership to resign.

She subsequently left Bangladesh onboard a military helicopter and later boarded a C130 military transport aircraft which landed at India’s Hindan airport in the evening. Hasina is then believed to have travelled further and is likely bound for a final destination in London.

Hasina’s fifteen year tenure in power was largely marked by remarkable economic growth, with Bangladesh becoming one of the fastest-growing economies in Asia. Hasina was also able to establish and balance strong bilateral ties with both India and China despite their rivalry. Her shrewd foreign policy and balanced approach, not only brought in both Indian and Chinese investment to the Bangladesh economy, but also helped its national infrastructure.

However, since 2020, the COVID-19 related economic downturn and its after-effects imposed severe restrictions on the Bangladesh economy and led to several structural problems such as a sharp fall in its foreign reserves, accumulated debt, liquidity issues and lower than expected remittances. 

The situation deteriorated further to the extent that Bangladesh had to seek a bailout loan package of $4bn from the International Monetary Fund (IMF). While the IMF approved the loan, it required Bangladesh to adhere to its guidance on implementing several austerity measures, especially in the public finance and power sectors.

These austerity measures were coupled with a constant vigil and repeated monitoring visits by IMF delegations before the release of each tranche of funds from the loan. Yet, while the student protests were directly aimed at a controversial quota reserving a 30% job quota for descendants of Bangladesh’s 1971 liberation war freedom fighters - the underlying issue was public rage against the economic downturn, the sharply rising cost of living and lack of lucrative career opportunities in the country - which was exacerbated by the seemingly unfair quota.

In the first half of 2024, Bangladesh was able to mitigate several of its central economic problems with the implementation of the IMF’s recommendations and subsequently receiving the millions of dollars in tranches of the loan attached to them. 

These IMF recommended measures only served to sharply raise prices of essential commodities such as electricity for both households and businesses across Bangladesh, further adding to brewing discontent among the masses.

While the Bangladesh Army Chief of Staff announced that the military would now oversee the transition of power to an interim government after Hasina’s exit, it is unclear to what extent the interim government will be able to preserve the relative stability of its predecessor regime. 

If the instability and economic impact of the unrest during the violent student protests are any indicator, the future for Bangladesh doesn’t bode well. Remittances from the Bangladeshi diaspora, denominated in foreign currencies, has been a key source for foreign reserves for the government in Dhaka. How and to what extent this will continue is unknown.

During the protests, the government's brutal crackdown threatened this source as various diaspora organisations called upon all Bangladeshi nationals and people of Bangladeshi origin to refrain from sending funds back to the country in order to pressure the government. 

Furthermore, the European Union(EU) which was, until the last week of July in the process of discussing the details of a potential trade deal with Bangladesh, suspended the talks citing excessive use of force by Hasina’s regime and associated human rights concerns. It is now unclear how the EU will perceive the interim government and the successive administration of the country, and if the talks concerning the trade deal will pick up anytime soon.

Bangladesh’s bilateral trade with its neighbours will also likely be affected, at least in the short term - in the process freezing production as well as imports and exports, with an outsized impact on its textile industry. 

Bangladesh relies on Indian cotton for its textile industry, the import of which might be disrupted following the unrest and current uncertainty in the country.