Bangladesh was thrust into the global spotlight this week after large-scale, violent unrest forced the country's long-time premier, Sheikh Hasina, to quit and flee to neighboring India.

The mass protests began as a student movement against quotas in government jobs but then escalated into a broader anti-government uprising.

The quota scheme reserved over half of well-paid and secure government jobs for specific groups. Many protesters saw it as discriminatory and unfair, particularly at a time when Bangladesh is facing economic stress.

"There weren't many jobs being created in the private sector as well," Ahsan H. Mansur, an economist and director of the Policy Research Institute of Bangladesh, told DW.

"The unemployment issue is the root cause of the student movement," he added.

Not enough jobs for the youth

During Hasina's 15-year rule, Bangladesh made some economic progress, building big-ticket projects such as highways, rail lines and ports, as well as expanding the electric grid.

The country's garment industry also became one of the world's most competitive.

But the $450-billion (€412-billion) economy has struggled since the COVID-19 pandemic. Shrinking foreign exchange reserves even pushed the government to seek a multibillion-dollar loan from the International Monetary Fund.

Even though the South Asian country's gross domestic product is currently growing at over 5% annually, it has struggled to create enough, decent-paying jobs for its vast youth population.

Nearly half of Bangladesh's 170 million people are aged under 30. While this is generally seen as a demographic dividend, it could turn into a "demographic curse" if these people can't find productive employment, said Mansur.

Joblessness among people aged 15 to 24 in the country was a high 15.7% in 2023, according to the International Labor Organization.

At the same time, hundreds of thousands of young new graduates are entering the labor market every year. "But they are not employable, given the extremely poor quality of education and the lack of required skills," said Mansur, pointing out that the youth "felt deprived, cheated upon and that they will never get employed."

Soaring prices hit people hard

Against this backdrop, one of the big tasks facing the interim government led by Nobel laureate Muhammad Yunus, which was sworn in on Thursday, will be to facilitate job growth.

But that's not the only challenge. Bangladesh has seen persistently high inflation in recent years, with the rate hovering at nearly 10% in 2023.

Rising food and commodity prices, in particular, have been a major concern for many Bangladeshis. "People have been frustrated and the income distribution and inequality was getting very bad in the country," said Mansur.

Fahmida Khatun, head of research at the Center for Policy Dialogue think tank in Dhaka, told DW that the economic situation in Bangladesh has been deteriorating for the past couple of years.

She pointed to high inflationary pressure worldwide since the COVID-19 pandemic and the start of Russia's war against Ukraine. "But over the past two years, almost all countries have managed to bring their inflation down, except Bangladesh," she said.

Khatun blamed the situation on the central bank's inability to take appropriate measures to tackle the problem.

"They were stuck up on policies which are not beneficial for the country, but rather only for a certain group of people," she said, accusing Hasina and her Awami League party of compromising the independence of all the country's regulatory bodies.

Khatun called on the new government to implement reforms to ensure these bodies' independence.

Can Yunus push through structural reforms?

In response to the turmoil that ensued after Hasina's dramatic exit, many shops and factories shut their doors this week.

That included factories in the textile sector, which is crucial to Bangladesh's economy.

The country earns over $46 billion annually by exporting clothes abroad, with most of them destined for Europe and the US.

More than 4 million workers, mostly women, are employed across some 4,000 factories, which supply many of the world's top brands, including Levi's, Zara and H&M.

"From an economic perspective, getting factories up and running again will be a priority," Gareth Leather and Shilan Shah, economists at London-based Capital Economics, said in a research note this week.

They warned that garment makers could shift their operations elsewhere if authorities failed to get a grip over the situation. "But provided peace and stability is restored to the streets soon, we suspect that the long-term impact on the sector will be relatively small."

On Friday, the interim administration deployed the army in the industrial districts to help reopen and ease operations of the clothing factories, the German dpa news agency reported, citing Shovon Islam, one of the directors of Bangladesh Garments Manufacturers and Exporters Association.

Mansur said the country needs fundamental reforms to address the structural challenges facing the economy.

They include strengthening regulatory institutions and eliminating corruption as well as reforming the banking and financial sector, and taxation and customs policies.

"The government needs to set up multiple expert groups to address those. And they have to do it very quickly. So that's the big challenge," he said.

Zobaer Ahmed contributed to this report.

Edited by: Shamil Shams