Investment in Bangladesh stagnated last fiscal year, with both public and private sectors showing little to no growth in the last fiscal year, posing a challenge to future economic expansion and job creation, says the Policy Research Institute (PRI.
In its monthly publication “Macroeconomic Insights” unveiled Thursday, the private think tank pointed to a 20–25 percent drop in capital goods imports and a sharp deceleration in construction activity as clear signs of stalled investment.
Citing IMF projections, PRI noted that public investment is expected to slip to 6.4 percent of GDP in FY25 before recovering slightly to 7 percent the following year.
Ashikur Rahman, principal economist at PRI, said the investment climate remains constrained by long-standing bottlenecks.
“Energy shortages, poor logistics, and political uncertainty have become structural impediments to growth,” he said in his keynote. “It is neither accurate nor sufficient to blame slower growth solely on tight monetary policy. Without addressing real-economy constraints, Bangladesh cannot stimulate investment or sustain growth,” he said.
The economist noted that Bangladesh is grappling with a severe slowdown in investment. “Capital machinery imports are down 20–25 percent, construction growth is weakening, and industrial production remains sluggish despite a slight uptick in June,” he said.
He noted that the ready-made garment and mining sectors underperformed, while electricity generation declined by 1 percent in July compared to the previous year—further reflecting weak overall growth.
To meet rising energy demand, the government increased LNG imports by 43 percent in June, alongside a 13 percent rise in electricity imports.
The think tank also acknowledged that Bangladesh’s economy is showing signs of stability, supported by tight monetary policy, fiscal discipline, strong remittances, and robust exports.
The event was chaired by Dr Khurshid Alam, Executive Director of PRI, with Bangladesh Bank’s Chief Economist Mohammad Akhtar Hossain as chief guest. Leading economists, policy experts, and private sector representatives also joined the discussion.
Addressing the gathering, Akhtar Hossain acknowledged that the biggest challenge facing the economy is persistently high inflation, currently hovering around 9 percent. He said efforts are underway to bring it down to 3 percent as quickly as possible.
“Once we achieve that target, the goal will be to keep inflation around 4 percent in the long run, with only short-term fluctuations,” he said. Lower inflation, he explained, would reduce deposit and lending rates, cut business costs, and stimulate investment and broader economic activity.
Business leaders at the event painted a sobering picture of the private sector. Rising costs, shrinking credit, and political uncertainty are choking investment, they said, while unemployment and poverty are on the rise.
“Retail shops are closing, rural enterprises are shutting down, and large companies are reporting profit declines of 35–40 percent,” said Anwar-Ul-Alam Chowdhury (Parvez), President of the Bangladesh Chamber of Industries (BCI). “These are not new problems—they have been building for five to six years.”
He added that industries such as cement, footwear, and textiles are particularly under pressure
Business leaders echoed concerns over the fragile investment environment, warning that the country is not yet prepared for its planned graduation from Least Developed Country (LDC) status.
Former National Board of Revenue (NBR) Chairman Dr Nasiruddin Ahmed criticized current tax audit practices, calling for a computerised random audit system to ensure fairness.
Habibullah N Karim, Senior Vice President of the Metropolitan Chamber of Commerce and Industry (MCCI), said Bangladesh is facing “jobless growth,” with rising poverty and unemployment.
He called for targeted incentives to boost ICT, agro-processing, and RMG sectors.
Dr Ahmad Ahsan, Director of PRI, stressed that political uncertainty has long been a barrier to Bangladesh’s potential. “Bangladesh could have emerged as a global manufacturing hub like Vietnam, but weak policy implementation and instability held us back,” he said.
He argued that reducing political uncertainty is essential to restoring investor confidence, generating employment, and sustaining long-term economic growth.