In a roundtable discussion on Wednesday, experts said that the economy was under pressure due to high inflation, weak investment, instability in the banking sector and slowdown in exports. To rebound from this situation, there is no option but to implement rapid and effective structural reforms.
These were highlighted at a roundtable discussion titled "Bangladesh's Development Vision: Short and Medium-Term Priorities of the Newly Elected Government" organized by the Centre for Policy Dialogue (CPD) and the Daily Star.
CPD executive director Dr. Fahmida Khatun presented the keynote speech at the event.
Khatun said that GDP growth has slowed to 3.49% in FY25, which is significantly lower than the previous year. The slowdown in the industry and services sectors and stagnation in private investment are the major reasons for the decline.
However, growth increased to 4.50% in the first quarter of FY26. Although this indicates a gradual recovery in economic activity, it cannot yet be called a permanent recovery.
High inflation has created great pressure on the living conditions of the common man in the last two years. In June of FY24, overall inflation was 9.7%. In January 2026, it decreased to 8.66%. The situation has improved slightly due to a slight decrease in food inflation.
But at the same time, the wage growth rate remained stable at 8.12% in January. As a result, real income has not increased, but in many cases, purchasing power has decreased. Experts say that not only inflation has to be reduced - initiatives must also be taken to increase people's real income.
Although some liquidity indicators in the banking sector have improved, the default loan situation is worrying. The default loan rate has increased significantly after the introduction of a loan classification system based on international standards. Later, it was warned that even if the debt was reduced somewhat through rescheduling, this problem would not be solved without structural reforms.
Bangladesh is preparing to graduate from the list of least developed countries in November 2026. This carries the risk of reducing market benefits. Therefore, increasing export diversification and improving competitiveness are the need of the hour.
Experts said that if decisions are not taken quickly in these areas - controlling inflation, increasing revenue collection, establishing good governance in the banking sector, ensuring an investment-friendly environment, and formulating a post-LDC strategy - the pressure on the economy will increase further.
According to them, while there are some positive signs in the economy, the overall situation is still fragile. Therefore, major and deep reforms are the biggest demand of the time to turn things around.
‘Need to go tough’
Top business leader and vice president of International Chambers of Commerce Bangladesh (ICC Bangladesh) AK Azad has said that the country's economy will not stabilize unless strict action is taken against defaulters.
He highlighted the issue of defaulted loans, investment stagnation and energy crisis as major challenges for the new government to revive the economy.
Azad said that currently the average defaulted loan rate in the country has reached 36% and it is about 50% in government banks.
“Who took this huge amount? Bangladesh Bank has given an exit policy for those who are willful defaulters—we support it. However, unless strict action is taken against those who have shifted their business to other sectors without investing in loans, the economy will not return to good shape,” he said.
He said that the government’s bank loan acceptance rate is currently 32.19%, while the private sector’s loan growth is only 6.1%. Due to this, industrialists are not getting the necessary financing. “I don’t have money, but I can’t take it. There is no gas connection, electricity crisis—how can I invest in new industries?” he asked.
AK Azad alleged that 58% of the government’s total loan is being spent on salaries and allowances, interest payments and subsidies, which are going to non-productive sectors. Revenue collection is also not as expected. In the first six months of the fiscal year, revenue came in Tk36,000 crore less than the target. GDP growth has fallen to 3.97%.
Urging investment in the energy sector, he said that thousands of new gas connection applications are stuck in various ministries and Titas. Entrepreneurs are having to use alternative fuels at additional cost due to lack of gas in industries. “It is possible to provide that gas to industries by converting stove gas into LPG,” he said.
He further said that it is not possible to control inflation by increasing the interest rate on bank loans alone. To increase revenue collection, industries and factories must be kept operational, employment must be created and productive investment must be increased. Only when industries are operational will VAT, income tax and customs collection increase—as a result, the economy will gain momentum.
