Country’s economy is facing a terrible disaster, all indicators are down.

Economic Desk

Several key indicators of Bangladesh’s economy are trending downward. Private sector credit growth, capital equipment imports, new LC openings, and exports are all showing slowdowns.

Economists say the deterioration in these indicators points to stagnant investment and weakening domestic demand, compounded by prolonged inflation, gas shortages in industrial areas, and a shortage of dollar liquidity.

The situation has reached such a point that in the last one and a half years, more than 350 small and medium-sized factories have closed, creating severe pressure on local production, income, and employment, which has created a terrible strain on the country’s economy.

Dr. Mustafa K. Mujeri, Executive Director of the Institute for Inclusive Finance and Development (INFOD) and former Director General of BIDS, believes that the current political and social instability in the country is seriously damaging the investment climate.

According to him, private sector credit growth is at a long-term low, foreign investment is almost stagnant, and the path to industrial expansion is narrowing due to a decline in capital equipment imports.

He warned that investment will not pick up speed until an effective political government is established. If the crisis deepens, growth, employment, and industrialization will all be negatively impacted.

According to BGMEA data, 353 garment factories have closed in Savar, Gazipur, Chittagong, Narayanganj and Narsingdi in the last 14 months, leaving about 120,000 workers unemployed.

BGMEA President Mahmud Hasan Khan Babu said that production is often disrupted due to worker dissatisfaction and agitation, which quickly spreads to other regions.

According to him, allowing only 20 workers to form a trade union could destabilize the industry. He also said that high interest rates, a fuel crisis and a lack of a conducive environment have reduced investment, resulting in unemployment at an all-time high.

According to Bangladesh Bank, import LCs worth $5.64 billion were opened in October this year, which is 12.15% less than last year. Bill payments against LCs also decreased by 11.48%.

Experts say that while the dollar supply is stable, businessmen have lost interest in taking risks in new projects. Political uncertainty and tighter surveillance have also reduced money laundering under the guise of imports.

IMF forecasts Bangladesh’s GDP growth to be 4.9% in the 2025-26 fiscal year. ADB says 5% and the interim government has set 5.5%.

According to the World Bank, growth could reach 4.8% if necessary reform programs are implemented. However, it is necessary to increase revenue collection, reform the banking sector, and ensure transparency in the investment environment.

According to EPB data, export orders fell by $390 million in October compared to September. Orders fell by 15% in the Dhaka region, and 26% in Chittagong. Total export growth stood at 8.5% in the July-October period, which is 4.5% lower than the target. Growth in the ready-made garment industry is also on a downward trend.

Investors are withdrawing from the capital market due to political uncertainty. The DSE index has fallen by 420 points in the last one month. Trading has also decreased significantly.

After a visit to Dhaka, the IMF said that macroeconomic stability would be at risk unless bold steps were taken to increase revenue and reform the financial sector. It emphasized strengthening governance, reducing youth unemployment, and increasing economic diversification.

Businessmen believe that economic recovery is not possible without political stability.

Former FBCCI president Abdul Awal Mintu said that without free and acceptable elections, the private sector will not recover.

EAB President Mohammad Hatem said that political instability has made it difficult to deliver goods on time; fines are being levied and buyers are considering Bangladesh as risky.

Bank loan interest rates are also discouraging investment. Businessmen have demanded that interest rates be reduced to single digits.

Economists and businessmen agree that unless political stability returns, investment will not increase and economic recovery will be impossible. They expect imports, LC opening and investment to gradually increase once policy clarity comes after the election.