This update introduces Bangladesh'snew poverty numbers at $1.90 per capita per day in 2011purchasing power parity (PPP) prices, followed by an accountof recent economic development, the outlook, risks, andpolicy responses. The revised poverty rates aresignificantly lower, but follow the same downward historicaltrend seen when using the 2005 international extreme povertyline. Bangladesh can bring its extreme poverty rate down tonearly zero by 2030 either by accelerating GDP growth to 9percent per year, or by maintaining its recent growth ratewhile taking steps to make growth more inclusive. Bangladeshis on track to sustaining its recent 6 plus percent growthin the near and medium-term, driven by exports and strongdomestic demand. Security, financial and trade shocks arethe main risks. The policy challenges are to boostproductivity and private investment by reforming businessregulations, addressing infrastructure and energy deficitsand increasing the efficiency of financial intermediation. Aspecial policy focus in this report is on introducing carbon taxation.