Bangladesh’s economy is facing mounting uncertainty as business activities slow down and economic momentum weakens. Key indicators, including foreign exchange reserves, revenue collection, and private investment, remain stagnant, raising concerns about long-term stability and growth prospects.
Economic experts attribute the current downturn to a combination of domestic and external factors. The ongoing liquidity crisis in the banking sector, sluggish revenue collection, and a decline in foreign direct investment (FDI) have exacerbated the situation. Furthermore, political instability and regulatory uncertainties have deterred both local and foreign investors from making new commitments, putting additional strain on economic activity.
According to Bangladesh Bank data, foreign exchange reserves have been declining steadily, putting pressure on the local currency. As of March 2025, reserves have fallen below the critical threshold of $20 billion, sparking concerns over import financing and debt servicing.
At the same time, the National Board of Revenue (NBR) continues to miss collection targets, leading to budget deficits and reduced public spending on crucial infrastructure projects. “The government’s inability to meet revenue targets is limiting its capacity to invest in the economy. This is further dampening business confidence,” said a senior economist from a leading think tank.
Private sector investment, which has traditionally been a driver of economic growth, has also taken a hit. The Bangladesh Investment Development Authority (BIDA) reported a significant drop in new investment proposals, citing high borrowing costs, an uncertain policy environment, and global economic volatility.
The manufacturing and export sectors, which are vital to Bangladesh’s economic engine, are also struggling. The garment industry, which contributes over 80% of total export earnings, has faced declining orders from key international markets due to sluggish global demand and rising production costs at home.
“The business community is facing multiple challenges, from high inflation to an unpredictable policy framework. Without urgent reforms and strategic interventions, the economy may continue to suffer prolonged stagnation,” said a prominent business leader.
Economists and industry leaders are urging the government to take immediate steps to restore business confidence. Suggested measures include easing monetary policies, ensuring better liquidity in the banking sector, streamlining tax policies, and fostering a more stable investment climate.
With economic uncertainty looming large, policymakers face mounting pressure to implement decisive actions that can prevent further downturns and steer the economy back toward a path of sustainable growth.
BKMEA president Mr. Mohammad Hatem expressed concerns about the worsening economic situation in Bangladesh, citing a combination of factors such as political instability, energy shortages, rising inflation, high tariffs on imported goods, and limited credit flow to the private sector.
The top business leader emphasized that the country’s economy is facing a significant crisis that is affecting industries and businesses. According to them, the ongoing political instability has created uncertainty, making it difficult for businesses to plan and operate effectively. The lack of stability is also discouraging both local and foreign investment, further compounding the economic challenges.
One of the leaders, a key figure in the manufacturing sector, stated that the chronic shortage of gas and electricity is severely hampering industrial production. “Without a steady supply of energy, it is becoming increasingly difficult for factories to maintain production schedules, and this is having a ripple effect on the economy,” they said.
Another business leader, involved in the import-export trade, highlighted the rising inflation and high tariffs on imported goods as major obstacles. “Inflation is eroding consumer purchasing power, and high tariffs are making essential goods more expensive,” they explained. The combination of these factors is squeezing both businesses and consumers, contributing to an overall decline in economic activity.
Additionally, both leaders pointed to the high interest rates on loans and the lack of credit flow to the private sector as key issues. “The high cost of borrowing is making it difficult for businesses to invest and expand, while the lack of credit availability is limiting growth opportunities,” said one of the business leaders.
The comments reflect growing concerns among the business community about the long-term impact of these issues on the country’s economy. With no immediate solutions in sight, many are calling for urgent policy changes and a resolution to the ongoing political unrest to prevent further deterioration of economic conditions.
Bangladesh’s economy is grappling with a persistent crisis, driven by a series of critical challenges, including political instability, energy shortages, rising inflation, high tariffs on imported goods, and a lack of credit flow to the private sector, S M Mizanur Rahman, Secretary General of Bangladesh Jubo Arthonitibid Forum told to the Daily Industry.
Political uncertainty has remained a major obstacle to economic stability, with frequent disruptions in governance affecting investor confidence and hindering long-term planning, said Rahman. Business leaders and economists agree that the lack of political stability is a key factor preventing both local and international investments from flowing into the country.
Adding to the economic strain are the ongoing shortages of gas and electricity, which are crippling industries. Manufacturers, especially in the textile and heavy industries, are facing severe disruptions in production due to power outages and inadequate energy supply. Industry insiders report that the situation is becoming unsustainable, with many factories unable to meet production targets.
At the same time, rising inflation continues to put pressure on consumers and businesses alike. The cost of living is soaring, with food and essential goods becoming increasingly expensive. High tariffs on imported goods are further exacerbating the issue, making everyday items even more costly for consumers and businesses that rely on imports.
Another critical issue affecting the economy is the high interest rates on loans, which are making it difficult for businesses to access affordable credit. Many businesses are struggling to expand or even maintain operations due to the steep cost of borrowing. Furthermore, the lack of credit flow to the private sector is stalling potential growth, with many entrepreneurs unable to access the financial resources needed to innovate or invest in new projects.
Experts warn that unless urgent measures are taken to address these interconnected issues, Bangladesh’s economy could face long-term stagnation. The country needs political stability, a reliable energy supply, and a more conducive financial environment to avoid further economic decline.
Apart from this, the economy continues to face serious challenges, as foreign exchange reserves and revenue collection have not met expected targets, and the country struggles with stagnation in investment and employment. Experts warn that without a clear roadmap for economic recovery, the country’s fragile economic situation could worsen in the coming months.
Despite efforts to stabilize the economy, foreign exchange reserves have failed to show significant improvement, putting pressure on the country’s ability to meet import demands and service external debts. The slow pace of revenue collection has also hampered government initiatives to fund critical public services and infrastructure projects. As a result, the government has been forced to reconsider its fiscal policies to boost revenue and restore financial stability.
Business leaders have expressed concern over the lack of new investments, which are crucial for economic growth and job creation. With little to no foreign or domestic investment inflows, many sectors are experiencing stagnation, leaving little room for economic expansion. The lack of new investments is also directly impacting employment opportunities, with few new jobs being created to absorb the growing workforce.
Moreover, there is growing concern over the absence of a specific roadmap for overcoming the current economic fragility. While the government has taken steps to address key challenges, experts argue that without a detailed and coordinated plan for long-term economic recovery, Bangladesh may continue to struggle with its current issues. There is a pressing need for a comprehensive strategy that tackles political instability, energy shortages, inflation, and other barriers to growth.
In light of these challenges, economists and business leaders are calling for immediate reforms and a more strategic approach to stimulate investment, improve fiscal health, and strengthen the country’s economic foundations. Without decisive action, Bangladesh’s economic future remains uncertain, and the risks of continued stagnation could be significant.
