Private sector credit growth in Bangladesh has slumped to its lowest level in a decade, in keeping with a downward spiral beginning during the July Uprising.

According to Bangladesh Bank data released on Monday, credit growth stood at 6.49 percent at the end of June.

Some experts view this persistent decline as “a cause for concern”.

Centre for Policy Dialogue (CPD) Distinguished Fellow Mustafizur Rahman said the country’s economy has yet to overcome its investment slump.

He cited high bank interest rates, political uncertainty, and contractionary monetary policy as the main reasons behind the decline.

Fresh data shows that letters of credit for capital machinery imports fell by 25.41 percent in FY2025 compared with the previous fiscal year -- a decline Mustafizur warns could weigh heavily on employment.

“The fall in capital machinery imports is having an adverse impact on job creation. I see it as a serious concern,” he said.

He noted that while there are signs of “some stability” returning to the macroeconomy, investor “unease and uncertainty” remain.

The researcher believes such conditions may persist until the next election.

He also argued that if inflation drops to 7 percent, the policy interest rate should be cut, as high lending rates are having a significant negative effect on the economy.

For the July–December period, Bangladesh Bank has kept the policy interest rate at 10 percent, maintaining the same rate as in the first half of the year.

The private sector credit growth target has been set at 7.20 percent.

Governor Ahsan H Mansur has indicated that the policy rate will remain unchanged until inflation falls below 7 percent.

The central bank’s website holds credit growth data from 2015, which shows that June recorded the lowest rate in that period.

The second-lowest rate was in February this year, at 6.82 percent.