After more than one year of power consolidation following controversial elections won by incumbent AL party and boycotted by opposition BNP party, the domestic situation has been tense and increasingly disruptive since January. Strikes and road blockades have reappeared and are hampering economic activity. In addition to BNP’s permanent call for new polls under a neutral caretaker, violent actions escalated not only after opposition head Mrs Zia was temporarily put into house arrest but also after issuance of a warrant arrest against her as she is accused of corruption by a politicised justice.

Impact on country risk

The failure to engage in negotiations with the aim to find a political compromise is likely to cause prolonged civil turmoil. As witnessed by the continued cracking down on opposition activists – leading to arrest of thousands of them -, the AL might be tempted by a one-party military-backed regime. However, jailing historical opponent Mrs Zia would certainly intensify unrest across the whole country. AL’s strategy eventually risks radicalising the moderate opposition. In fact, it is already slowly favouring minority Islamist groups and leading to violence against secular and pro-democracy militants. Such a development might not be tolerated by the strong Bangladeshi army, whose intervention seems to be the only solution to an endless political crisis, and has to be avoided to prevent creeping Islamisation of politics and society. Meanwhile, hindrance to business is likely to translate into further delays in transport and trade and affect investment confidence and the country’s economic forecasts as in 2014. In an environment of violence and repression, the disrupted central garment sector could suffer from an enduring political crisis although it has shown resilience over the years despite sporadic domestic instability.

Analyst: Raphaël Cecchi, r.cecchi@credendogroup.com