Slow private sector credit growth, declining capital equipment imports, and low investment have been hindering Bangladesh's GDP growth, despite a stable macroeconomic environment, said Zaidi Sattar, chairman of the Policy Research Institute of Bangladesh (PRI) on Thursday.
He made this statement during his keynote presentation at the July edition of Monthly Macroeconomic Insights (MMI).
The program was jointly organized by the Centre for Macroeconomic Analysis (CMEA) of the Policy Research Institute of Bangladesh (PRI), in partnership with the Australian Department of Foreign Affairs and Trade (DFAT).
As chief guest, Dr Moyeen Khan, former minister for economic planning; information & broadcasting; science; and ICT, said: “Bangladesh’s export trade heavily depends on effective tariff policies with the United States; the country lags behind its competitors in securing favorable agreements.”
He also highlighted that building trust within the government is crucial for achieving long-term stability.
Zaidi Sattar and Ashikur Rahman, principal economist at PRI, delivered the keynote presentation.
Delivering the keynote presentation, Sattar noted that Bangladesh’s economy remains investment-driven, rather than consumption-led. A slowdown in private credit growth, reduced capital machinery imports, and lower investment, now accounting for around 29% of GDP, are contributing to slower GDP growth, although the macroeconomy remains stable.
He also emphasized that Bangladesh has been exporting to the US based on its comparative advantage in labor-intensive products, such as RMG and footwear.
“Given that the US is a large and expanding market, we need a favorable trade agreement with them. Relying on labor-intensive competitive advantage is no longer sufficient. We need a competitive trade deal because if our competitors obtain better trade terms, our global competitiveness will be undermined. This presents a new and pressing challenge that we have to deal with.”
Ashikur Rahman underscored that the measures and policies taken to restore good governance in the financial sector will require continuity over the next one to three years. This makes it imperative that the next elected political government show unfettered commitment to this broader vision of restoring discipline and governance in the banking sector.
Australian Deputy Head of Mission to Bangladesh, Clinton Pobke, attended the event as a special guest.
He remarked that the MMI event serves as a bridge to understanding complex economic issues and engaging with them effectively.
Muhammad Abdul Mazid, former chairman of the NBR, also attending as a panelist, expressed his concern and stated: “Our fiscal space is limited. Reforms, particularly in tax policy, debt management, and GDP calculation, are essential, even if they are painful. Without a clear separation between policymaking and implementation within the NBR, meaningful progress will remain out of reach.”
An open floor discussion followed, offering space for audience engagement on monetary policy, inflation management, and the digitalization of revenue administration.
The session concluded with closing remarks by Zaidi Sattar.
Earlier, Khurshid Alam, executive director of PRI, opened the session, noting that revenue remains a key challenge and that reforms, such as separating policymaking from implementation in the NBR, are still a work in progress.
