Economists and business leaders have warned that despite signs of macroeconomic stabilisation, Bangladesh’s economy remains vulnerable to being locked into a sub-optimal low-growth equilibrium, driven by weak investment, high interest rates, persistent inflation and rising unemployment.
They stressed the need to convert short-term stabilisation gains into a coherent medium-term reform agenda, with a particular emphasis on restoring investor confidence through political stability, stronger institutions, financial sector reforms and improved revenue mobilisation.
The observations were made at a seminar organised by the Policy Research Institute of Bangladesh (PRI) at its Dhaka office, where the latest edition of the Monthly Macroeconomic Insights (MMI), prepared by PRI’s Centre for Macroeconomic Analysis (CMEA), was unveiled.
Kamran T. Rahman, President of the Metropolitan Chamber of Commerce and Industry (MCCI), attended the event as chief guest, while the session was chaired by PRI Chairman Dr Zaidi Sattar. Dr Nasiruddin Ahmed, former chairman of the National Board of Revenue (NBR), and Ashraf Ahmed, former president of the Dhaka Chamber of Commerce and Industry (DCCI), provided commentary on the keynote paper presented by Dr Ashikur Rahman, Principal Economist at PRI.
Dr Ashikur Rahman described the outgoing year as one of relative stabilisation, despite ongoing political uncertainty. He noted improvements in several macroeconomic indicators, including a rise in foreign exchange reserves, greater exchange rate stability and a modest easing of inflation. However, he cautioned that the economy faced the risk of becoming trapped in a cycle characterised by lower growth, weak investment, elevated inflation and high capital costs.
From the private sector perspective, Kamran T. Rahman said Bangladesh had reached a critical juncture, with industries facing mounting challenges from high financing costs, energy shortages and policy uncertainty. He emphasised the importance of restoring political stability, strengthening institutions, reforming the financial sector, improving revenue mobilisation and rebuilding confidence among both investors and households.
He noted that economic growth remained subdued and that many investors were adopting a wait-and-see approach ahead of the national election. According to him, high borrowing costs, policy uncertainty and energy-related constraints were discouraging businesses from pursuing expansion plans. He added that restoring growth required not only better macroeconomic indicators but also predictable, well-implemented policies underpinned by political stability.
PRI Chairman Dr Zaidi Sattar said Bangladesh had succeeded in regaining a degree of macroeconomic stability despite facing severe external and domestic shocks, but that growth had slowed significantly due to weak investment. He observed that the economy’s inherent growth potential remained around 6%, but current growth had fallen below 4% as the investment-to-GDP ratio declined to 28–29%, compared with the 30% needed to sustain higher growth rates.
