Bangladesh embarks on a transformative journey in 2025, balancing economic turbulence and political uncertainty with glimmers of hope from financial reforms and a tentative election roadmap under the interim government.
The preceding year, 2024, was marked by a student-led uprising that ousted Sheikh Hasina’s regime, exacerbating economic woes rooted in global crises, rampant corruption, and structural inefficiencies. Yet, the interim government’s reform efforts and improved remittance inflows have kindled cautious optimism for the future.Despite winning a controversial third consecutive term at the start of 2024, the Awami League’s attempts to revive the economy—anchored by a $4.7 billion IMF loan tied to tough reforms—proved insufficient. Reserves continued to deplete, dollar shortages disrupted essential imports, and mounting outstanding payments for fertilizer and fuel underscored the nation’s economic vulnerabilities.
The mass uprising that toppled the Awami League government in August brought Bangladesh to a standstill, disrupting economic activity and worsening the plight of the poor and fixed-income populations. Political instability, law and order issues, and uncertainty stalled investment and brought trade and commerce to a crawl.
A Glimmer of Hope
The interim government, led by Chief Adviser Prof. Muhammad Yunus, has begun addressing systemic issues in the financial sector. Banking reforms are underway, foreign exchange reserves have shown modest improvement, and a government-formed White Paper Committee has outlined a path forward. Measures include cutting unnecessary expenditures, reforming the capital market, and stabilizing governance costs.
While significant challenges remain—such as political instability, law and order concerns, and high loan interest rates—there are signs of resilience. Record remittances of $26.67 billion in 2024, driven by a 9% hike in the official dollar rate, have boosted reserves to $21.33 billion. The ready-made garment (RMG) sector continues to drive export growth, helping narrow the trade deficit.
Potential changes in US trade policies under Donald Trump’s presidency could further open doors for Bangladeshi exports, providing a lifeline for economic recovery.
Dr. Zahid Hossain, former Lead Economist at the World Bank, observes that 2024 was unprecedented in its challenges, with inflation stubbornly high and investment stalled. However, he emphasizes that achieving a growth rate of 4–4.5% in FY25 would be a noteworthy accomplishment, given the circumstances.
“If the economy grows by 4 percent this fiscal year, it should be considered a significant achievement,” he remarked.
To address high inflation, he recommended focusing on effective monitoring of any artificial crises within the entire food supply chain, rather than relying on coercive policing measures targeting retailers.
He further emphasized the importance of ensuring that people can go about their daily lives freely and feel secure.
“Without curbing inflation and guaranteeing safety, it will be difficult to rejuvenate the economy,” he noted.
The economist expressed cautious optimism for the latter part of 2024.
“Discussions on reforms have started, and some initiatives are already underway. The outcomes of these efforts may become visible over time,” observed Dr. Zahid.
The IMF projects growth at 3.8%, while the Asian Development Bank offers a more optimistic forecast of 4.5%. Sustained efforts to curb inflation, secure livelihoods, and stabilize markets are essential for revitalizing the economy.
The Road Ahead
With national polls expected in late 2025 or early 2026, the interim government has removed some uncertainty, offering hope for political stability. However, sustained reforms and effective governance will be critical to navigating the complex challenges that lie ahead.
Bangladesh’s journey in 2025 will likely be defined by its ability to balance immediate economic relief with long-term structural transformation, as the nation strives to recover and rebuild.
