Tuesday, 18 November, 2025
Bangladesh’s economy is at a perilous juncture, caught between prolonged political instability, eroding investor confidence, and persistent inflation. Both domestic and foreign investment have slowed sharply, leaving citizens to bear the brunt of rising prices and dwindling opportunities.
Although the country has avoided the feared “Sri Lanka-style collapse”, economists warn that without political stability and decisive reforms, the risks ahead remain substantial.
International forecasts underscore the pressure. The World Bank projects growth at 4.8 percent for FY25, the ADB at 4.3 percent, and the IMF between 3.9 and 5.0 percent — all well below the 6 percent-plus growth previously achieved.
The World Bank’s latest Bangladesh Development Update further warns that by 2025, an additional 3 million Bangladeshis could fall into extreme poverty, pushing the rate from 7.7 percent to 9.3 percent. The figures highlight deepening economic fragilities and widening inequality, threatening decades of poverty reduction.
The interim government, formed in August 2024, has introduced reforms, but international lenders such as the IMF and JICA have linked further disbursements to the formation of an elected government and continued structural adjustments. With elections approaching, investors remain cautious, awaiting clarity before committing capital.
Signs of stabilisation are limited. A balance of payments surplus, supported by rising remittances, has eased immediate pressures, yet structural vulnerabilities persist. Heavy reliance on the ready-made garment sector and remittances leaves the economy exposed to external shocks.
Experts stress that diversification into pharmaceuticals, ICT, agro-processing and light engineering is essential for sustainable growth.
Domestic activity is slowing. Private sector credit growth has declined, while imports of capital machinery have fallen, signalling reduced investment. Unemployment exceeds 2.7 million, including 900,000 graduates, and nearly 19 percent of youth aged 15–24 are NEET — not in education, employment or training — representing a significant loss of productive capacity.
The banking sector remains fragile. Politically influenced lending, mismanagement, and financial irregularities have left banks with high non-performing loans and capital shortfalls. Billions of taka have been siphoned off by powerful actors, undermining trust.
The central bank’s plan to merge five Islamic banks is a step toward stabilisation, but restoring confidence will require strict oversight. Private banks, wary of political uncertainty, continue to limit lending, further slowing production and worsening unemployment, inequality, and barriers to women’s economic participation.
Inflation remains a major concern. At 8.17 percent in October 2025, down slightly from September, it remains above government targets. Supply disruptions, global commodity prices, and the depreciating taka have put essential goods out of reach for many.
The average FY25 inflation of 10.03 percent has exacerbated food insecurity: 88 percent of low-income households cannot afford two full rice meals a day, and 60 percent of families earning Tk 10,000–15,000 cannot afford breakfast. Unchecked, these trends threaten widespread malnutrition, particularly among children.
Inequality and structural discrimination continue to weigh on growth. Development gains remain uneven: adult literacy stands at 73.42 percent in Barisal versus 66.53 percent in Sylhet, while child mortality among the poorest quintile is more than double that of the richest.
Multidimensional poverty affects 27 percent of rural residents compared with 13.48 percent in urban areas. Women face systemic barriers, compounded by harassment, violence, and entrenched social norms.
Quality gaps further complicate progress. In education, certificate-driven learning has widened inequality, while health sector infrastructure expansion has not translated into better services for poorer communities.
The power and energy sector is under strain. High generation costs, non-competitive contracts, reliance on imported fuels, and poor coordination have pushed subsidies upward, with 54 percent benefiting the top 40 percent of earners. Frequent shortages continue to disrupt production, deterring investment at a critical moment.
The interim government, formed in August 2024, has introduced reforms, but international lenders such as the IMF and JICA have linked further disbursements to the formation of an elected government and continued structural adjustments. With elections approaching, investors remain cautious, awaiting clarity before committing capital.
Global factors add further uncertainty. Sluggish growth, US tariff increases, geopolitical tensions, and the scheduled LDC graduation in November 2026 threaten export performance. Climate risks — rising seas, cyclones, and erratic rainfall — continue to imperil agriculture, infrastructure, and livelihoods.
The interim government remains committed to the 2026 LDC graduation, but private sector leaders argue the country is ill-prepared and are calling for a five- to six-year deferral. Yesterday, business leaders urged a visiting UN delegation to recommend postponement, citing macroeconomic stress, inflated growth figures under the previous government, and overall unpreparedness.
Despite the daunting challenges, recovery remains possible. Economists stress that Bangladesh can regain momentum if political stability is restored, institutions are strengthened, and a coherent economic strategy is adopted, grounded in transparency, accountability, and inclusion.
The months ahead will be decisive; the country’s ability to navigate political transition and implement long-overdue reforms will determine whether it moves toward renewed growth or deeper uncertainty.
Comments
Bangladesh’s economy is at a perilous juncture, caught between prolonged political instability, eroding investor confidence, and persistent inflation. Both domestic and foreign investment have slowed sharply, leaving citizens to bear the brunt of rising prices and dwindling opportunities.
Although the country has avoided the feared “Sri Lanka-style collapse”, economists warn that without political stability and decisive reforms, the risks ahead remain substantial.
International forecasts underscore the pressure. The World Bank projects growth at 4.8 percent for FY25, the ADB at 4.3 percent, and the IMF between 3.9 and 5.0 percent — all well below the 6 percent-plus growth previously achieved.
The World Bank’s latest Bangladesh Development Update further warns that by 2025, an additional 3 million Bangladeshis could fall into extreme poverty, pushing the rate from 7.7 percent to 9.3 percent. The figures highlight deepening economic fragilities and widening inequality, threatening decades of poverty reduction.
The interim government, formed in August 2024, has introduced reforms, but international lenders such as the IMF and JICA have linked further disbursements to the formation of an elected government and continued structural adjustments. With elections approaching, investors remain cautious, awaiting clarity before committing capital.
Signs of stabilisation are limited. A balance of payments surplus, supported by rising remittances, has eased immediate pressures, yet structural vulnerabilities persist. Heavy reliance on the ready-made garment sector and remittances leaves the economy exposed to external shocks.
Experts stress that diversification into pharmaceuticals, ICT, agro-processing and light engineering is essential for sustainable growth.
Domestic activity is slowing. Private sector credit growth has declined, while imports of capital machinery have fallen, signalling reduced investment. Unemployment exceeds 2.7 million, including 900,000 graduates, and nearly 19 percent of youth aged 15–24 are NEET — not in education, employment or training — representing a significant loss of productive capacity.
The banking sector remains fragile. Politically influenced lending, mismanagement, and financial irregularities have left banks with high non-performing loans and capital shortfalls. Billions of taka have been siphoned off by powerful actors, undermining trust.
The central bank’s plan to merge five Islamic banks is a step toward stabilisation, but restoring confidence will require strict oversight. Private banks, wary of political uncertainty, continue to limit lending, further slowing production and worsening unemployment, inequality, and barriers to women’s economic participation.
Inflation remains a major concern. At 8.17 percent in October 2025, down slightly from September, it remains above government targets. Supply disruptions, global commodity prices, and the depreciating taka have put essential goods out of reach for many.
The average FY25 inflation of 10.03 percent has exacerbated food insecurity: 88 percent of low-income households cannot afford two full rice meals a day, and 60 percent of families earning Tk 10,000–15,000 cannot afford breakfast. Unchecked, these trends threaten widespread malnutrition, particularly among children.
Inequality and structural discrimination continue to weigh on growth. Development gains remain uneven: adult literacy stands at 73.42 percent in Barisal versus 66.53 percent in Sylhet, while child mortality among the poorest quintile is more than double that of the richest.
Multidimensional poverty affects 27 percent of rural residents compared with 13.48 percent in urban areas. Women face systemic barriers, compounded by harassment, violence, and entrenched social norms.
Quality gaps further complicate progress. In education, certificate-driven learning has widened inequality, while health sector infrastructure expansion has not translated into better services for poorer communities.
The power and energy sector is under strain. High generation costs, non-competitive contracts, reliance on imported fuels, and poor coordination have pushed subsidies upward, with 54 percent benefiting the top 40 percent of earners. Frequent shortages continue to disrupt production, deterring investment at a critical moment.
The interim government, formed in August 2024, has introduced reforms, but international lenders such as the IMF and JICA have linked further disbursements to the formation of an elected government and continued structural adjustments. With elections approaching, investors remain cautious, awaiting clarity before committing capital.
Global factors add further uncertainty. Sluggish growth, US tariff increases, geopolitical tensions, and the scheduled LDC graduation in November 2026 threaten export performance. Climate risks — rising seas, cyclones, and erratic rainfall — continue to imperil agriculture, infrastructure, and livelihoods.
The interim government remains committed to the 2026 LDC graduation, but private sector leaders argue the country is ill-prepared and are calling for a five- to six-year deferral. Yesterday, business leaders urged a visiting UN delegation to recommend postponement, citing macroeconomic stress, inflated growth figures under the previous government, and overall unpreparedness.
Despite the daunting challenges, recovery remains possible. Economists stress that Bangladesh can regain momentum if political stability is restored, institutions are strengthened, and a coherent economic strategy is adopted, grounded in transparency, accountability, and inclusion.
The months ahead will be decisive; the country’s ability to navigate political transition and implement long-overdue reforms will determine whether it moves toward renewed growth or deeper uncertainty.
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