Bangladesh has roughly two decades before its working-age population share peaks in 2045, offering a crucial but temporary window to turn rapid demographic shifts into economic opportunity, according to a new World Bank report Tuesday.
While Bangladesh has more time than most of its regional peers, structural obstacles urgently require action, warns the report, titled Demographic Change in South Asia: From Tailwinds to Headwinds for Development.
Across South Asia, the working-age population numbering 1.17 billion people will peak and begin shrinking in less than 10 years.
By 2049, South Asia is projected to become an aged regional economy, with 14 percent of its population aged 65 and older. Bangladesh is expected to hit aged status in 2051.
Since 2000, an expanding share of prime-age adult workers has added 0.4% annually to South Asia's GDP and boosted labor productivity by 1.1% per year.
However, the region's demographic transition from an aging to an aged population is moving faster—and at lower per capita income levels—than in comparable emerging and developing economies.
As a result, the annual contribution of demographics to GDP growth is projected to shrink to just 0.1% between now and 2050.
“South Asian economies are aging faster and earlier in their development journeys,” said Johannes Zutt, World Bank vice president for South Asia.
“They need to act now to adopt policies and build infrastructure that create more and better jobs and deepen the gains from their ‘youth dividend’, while at the same time preparing for aging. This will enable South Asia to make the most of its large working age population and lay the foundations for a ‘second dividend’ as healthier older people continue contributing to the economy.”
The report highlights a persistent jobs gap in Bangladesh, where a favorable age structure has not fully translated into higher employment or productivity gains.
This shortfall is driven by limited formal job creation, low female labor-force participation, and lingering human capital gaps.
Approximately 84% of Bangladeshi workers—around 58 million people—are informally employed.
Higher education offers little guarantee of formal work, with 44% of university graduates holding informal jobs.
Furthermore, formal firms are expanding employment slowly, while small enterprises have, on average, shed workers recently.
“Bangladesh’s demographic opportunity depends on what it does now: help firms create better jobs, equip young people with market-relevant skills, and remove barriers that keep women out of work,” said Jean Pesme, World Bank division director for Bangladesh and Bhutan.
“At the same time, the country needs to start strengthening healthcare and old age income security for an aging population. That means meeting the growing financing need for aging transition will require stronger domestic resource mobilization.”
Systems for healthcare, long-term care, and pensions across South Asia remain poorly equipped for a population living longer without necessarily living healthier.
Currently, only 17% of the region's working-age population contributes to a pension scheme, and just 10% of older South Asians receive pension benefits—the lowest coverage rate worldwide.
To navigate this transition, the report recommends a dual strategy: sustaining the primary "youth dividend" by boosting job productivity, expanding MSME access to finance, streamlining regulations, enhancing education and health systems, and promoting female employment; and unlocking a "second dividend" through expanded healthcare, long-term care, pension safety nets, and increased national savings to raise long-term productivity.
