In recent years, a series of economic and political shocks has placed macroeconomic stability at risk. The COVID‑19 pandemic stalled economic activity and external connectivity for nearly two years, followed by the Russia–Ukraine war, which drove up global commodity prices and sharply reduced foreign reserves in 2023–24. The July 2024 uprising toppled the previous government, after which an interim administration oversaw one‑and‑a‑half years of slowing growth, weak domestic investment, subdued credit flows, and sluggish FDI amid political uncertainty. In April 2025, the United States imposed reciprocal tariffs on about 60 countries, adding to a global slowdown driven by trade disruptions and geopolitical tensions.
The confluence of these factors has left the macroeconomic situation highly vulnerable. Growth, which exceeded 6% for more than a decade, has slowed; inflation remains persistently high; and private‑sector credit, domestic investment, and FDI inflows have all weakened. In the first half of FY 2025–26, exports recorded negative growth compared with the same period of FY 2024–25 due to external shocks. Unemployment remains a major concern. The closure of many industries and layoffs following the 2024 political transition have worsened the situation, while subdued economic activity and declining investment have limited new job creation. This poses a serious risk to social stability, as thousands of educated young people enter the labour market each year without sufficient opportunities.
On 6 February, the BNP released its election manifesto, outlining 51 commitments under five pillars. It pledged to transform Bangladesh into an upper‑middle‑income economy with GDP reaching USD 1 trillion by 2034. The manifesto emphasises private‑sector‑led growth through simplified registration and legal procedures, streamlined licensing and taxation, and the development of digital ecosystems. It also promotes “Made in Bangladesh” initiatives to strengthen global competitiveness and aims to raise FDI from 0.5% to 2.5% of GDP by streamlining relevant policies and procedures.
Following the Thirteenth General Election, businesses are showing renewed optimism about economic recovery under the new government. The private sector—the economy’s main engine—can drive this revival if the cost of doing business is reduced, access to affordable credit improves, incentives for emerging sectors expand, logistics and infrastructure become more business‑friendly, and regulatory barriers are minimised. Micro, small, and medium enterprises (MSMEs)—which account for a large share of output and most employment—remain largely informal and face financing, capacity, and technology constraints; given their central economic role, the government should prioritise formalising MSMEs and providing targeted support.
Inflation remains high, and interest‑rate hikes have curbed investment and jobs, underscoring the need for supply‑side measures to stabilise prices more sustainably. Prolonged political uncertainty and a weak law‑and‑order environment have left private investment stagnant, now at a two‑decade low. Business dynamism has consequently weakened, and job creation has slowed. Reviving private‑sector growth requires improved access to finance, streamlined licensing and registration, a competitive incentive framework, upgraded infrastructure and logistics, reliable energy supply, more efficient regulation, and a stable security environment.
The country’s tax‑to‑GDP ratio remains among the lowest in South Asia, forcing heavy domestic and external borrowing and pushing public debt to about BDT 23 lakh crore, constraining fiscal space and crowding out private investment. Although the interim government began separating tax policy from tax administration within the National Board of Revenue (NBR), progress is incomplete; the new government must prioritise revenue mobilisation through accelerated NBR reforms, a review of tax exemptions, and digital modernisation of tax administration. The financial sector has become one of the economy’s most vulnerable areas, with non‑performing loans reaching an estimated 36%. The interim government introduced reforms to strengthen banking governance and enhance the autonomy, supervision, and oversight of Bangladesh Bank. The new government should assess these measures—including the proposed Financial Institutions Court Act—and expedite the recovery of defaulted loans.
Attracting FDI is critical for faster growth and technology transfer, yet existing policies have failed to deliver higher inflows. A comprehensive overhaul is required: implementing a single window under BIDA, digitalising VAT, customs, and investment approvals, establishing a 24/7 investor helpdesk, speeding up investor visas and work permits, improving infrastructure, and ensuring uninterrupted electricity and gas supply. Addressing these constraints is essential to achieving the target of raising FDI to 2.5% of GDP.
After taking office, the government sought a three‑year extension of Bangladesh’s graduation from Least Developed Country (LDC) status and submitted a request to the Chair of the Committee for Development Policy (CDP), citing emerging internal and external challenges. To ensure a smooth and low‑risk graduation, it must diversify export products and markets, enhance competitiveness, pursue free trade agreements with key partners, raise productivity, invest in infrastructure, improve logistics and port efficiency, and strengthen the operating environment for SMEs and other businesses. The challenges are significant, but the BNP’s mandate enables it to pursue essential reforms and to coordinate short-, medium-, and long-term strategies to revive the economy and deliver its manifesto commitments.
BUILD, as a public–private dialogue platform, undertakes private‑sector‑focused policy research and advocacy to support smooth business operations and contribute to national economic development. It has produced six sector‑specific business‑licence guidebooks to aid regulatory compliance and is currently developing a national traceability strategy to protect exports and strengthen competitiveness in line with EU sustainability requirements. BUILD remains committed to supporting the government’s private‑sector agenda, advancing economic recovery, and addressing pressing economic challenges.
Ferdaus Ara Begum
CEO, BUILD