Written by The Banking Post
Bangladesh’s economy is under mounting strain from sluggish growth, persistent inflation, weak private investment, and a deepening credit crunch, the Dhaka Chamber of Commerce & Industry (DCCI) has warned.
In its “Bi-Annual Review: Current State & Future Outlook of Bangladesh Economy (H2 FY25)”, released Sunday, the chamber said the economy is being squeezed by both global headwinds and domestic policy missteps, urging the government to act swiftly to avert a deeper crisis.
“Private investment dropped to 22.48% of GDP in FY25, the lowest in five years. Both LC openings and imports of capital machinery have declined,” said DCCI President Taskeen Ahmed, stressing that uninterrupted energy and stronger law and order are essential to revive investor confidence.
Growth dampened by credit crunch and energy crisis
Private sector credit growth slowed to 6.4% in June 2025, the weakest in 22 years, as inflation-fighting measures tightened liquidity. The chamber said this approach has cooled growth while failing to decisively tame prices.
The energy shortfall is worsening the slowdown, with industries—including the crucial readymade garments (RMG) sector—operating below capacity due to a daily gas supply deficit of over 1,000 MMCFD.
At the same time, the financial sector remains fragile. Non-performing loans (NPLs) swelled to Tk 5.3 trillion, or more than 27% of total loans, eroding confidence and weighing on the capital market. The DSEX index slid 7.2% in June from December 2024.
Reform and policy priorities
The DCCI called for immediate reforms, including easing loan terms, lowering interest rates, stabilising the banking sector, and diversifying exports. It also urged long-term LNG contracts and greater local gas exploration to ensure uninterrupted energy supply.
The report flagged Bangladesh’s looming graduation from Least Developed Country (LDC) status as a major vulnerability, warning the country is not adequately prepared for the loss of trade privileges. The chamber recommended formally seeking a three-year deferment while strengthening competitiveness and building a robust transition plan.
Export pressures
Key export sectors are already under strain. RMG exports fell 2.16% in H2 FY25, while the leather industry continued to shrink, restricted from Western markets over compliance issues and largely reliant on lower-value shipments to China.
Expert views
Economist Monzur Hossain of the General Economics Division said LDC readiness must involve both government and private sector. “Graduation could create opportunities in export diversification, supply chain development, high-end production, and SME growth. But the final decision rests with the next government,” he said.
Mustafizur Rahman, a fellow of the Centre for Policy Dialogue, noted that Bangladesh could request a deferral, but approval must come from the UN General Assembly. “Even if we seek an extension, we must continue preparations,” he added.
