Experts indicate that Bangladesh’s economic growth is facing challenges due to high interest rates, costly energy, and political uncertainty, significantly impacting business expansion. Key industry leaders emphasize the need for strategic reforms and initiatives to address these barriers, particularly as the country approaches its transition from Least Developed Country status.
Bangladesh is currently grappling with sluggish economic growth, attributed to high interest rates, expensive energy supplies, and political uncertainty. Economists and industry leaders assert that these factors are severely impeding business expansion despite the country’s abundant workforce. Zakir Hossain Nayan of the Anti-Discrimination Business Forum emphasized the detrimental effects of high inflation on consumer spending, which contributed significantly to the decline in internal trade during the previous months, although a gradual recovery is noted.
The liquidity crisis within banks has compounded the situation, as many banks are unable to make new investments following the past misuse of banking policies. Nayan predicts that business growth will continue to falter in the latter half of 2024, despite improvements such as increased money flow in the banking sector and easing dollar crisis.
Taskeen Ahmed, President of the Dhaka Chamber of Commerce & Industry, stated that Bangladesh’s GDP growth in the first quarter of the current fiscal year was merely 1.8%, with the manufacturing sector seeing a modest 1.43% growth. He highlighted various hurdles the economy faces, especially with the anticipated graduation from the Least Developed Country status in 2026, and urged for initiatives such as skill development in the SME sector and fostering low-cost credit.
Ahmed called for a comprehensive strategy to boost exports beyond the garment sector, advocating for investment in pharmaceuticals, leather, agro-processing, semiconductors, and IT. He emphasized the pivotal role of the private sector in crafting a “Smooth Transition Strategy” to support economic growth.
Khandoker Rafiqul Islam, former BGMEA President, remarked on the current stability of the garment sector in meeting export targets but expressed concerns over high costs and energy reliability affecting future performance. He pointed out ongoing challenges with working capital and energy shortages within the domestic textile sector, which could hinder progress.
The latest Bangladesh Purchasing Managers’ Index (PMI) report reflects the economic landscape, showing a 1.1-point decline signaling slower expansion. While agriculture and manufacturing continue to grow, construction and services are experiencing stagnation. M Masrur Reaz, Chairman of Policy Exchange, noted the ongoing sluggish demand and energy disruptions affecting business confidence, necessitating reforms and political stability to foster a sustainable recovery.
In summary, Bangladesh’s economic landscape is troubled by high interest rates, costly energy, and political instability, which collectively stifle business growth. While some positive developments are emerging, such as resilience in the export sector and gradual recovery in trade, the overall economic climate remains fragile. Comprehensive strategies involving skill development, investment in diverse sectors, and political consensus are essential for fostering sustained growth and improving business confidence.
Original Source: unb.com.bd
