Such is a mixed view of the country's economic situation presented in the Bangladesh Monthly Macroeconomic Insights (MMI) by the Policy Research Institute of Bangladesh (PRI).
A weak investment climate, coupled with political instability and uncertainty, brought investments to a standstill, leading to rising poverty through reduced real income and higher unemployment, the report adds.
Dr Ashikur Rahman, Principal Economist at PRI, presented the paper prepared under the Centre for Macroeconomic Analysis (CMEA) initiative, which was released Thursday at an event held at PRI's Dhaka office.
The paper carries recommendations for rethinking the expansion of social-safety nets and accelerating projects under the Annual Development Programme (ADP) to boost cash flow into the hands of the poor.
However, it also advises maintaining a tight monetary policy for another six months to ease inflationary pressure.
Mohammad Akhtar Hossain, Chief Economist of Bangladesh Bank, attended as chief guest, while experts, economists and private-sector representatives spoke at the event chaired by Dr Khurshid Alam, Executive Director of PRI.
Business leaders at the event lamented high business costs -- driven by a lack of energy security, political uncertainty, extortion, and harassment by tax authorities -- along with elevated interest rates as key factors behind weak private-sector investment.
They caution that unemployment and poverty have already increased, and warn that investment and economic growth are unlikely to recover unless these uncertainties are addressed.
"We are currently working to bring down our inflation rate from 9.0 per cent to 3.0-4.0 per cent," said Mohammad Akhtar Hossain and identified high inflation as major challenge the country is facing currently.
However, he said, simply reducing inflation is not sufficient. A rules-based monetary policy would be formulated to ensure long-term stability.
"Achieving the goal of maintaining inflation within the limit of 4.0 per cent would reduce deposit and lending rates and lower costs for businesses, supporting economic activity and investment," he added.
"Private investment has largely remained at a standstill, as political uncertainty and instability weigh heavily on business sentiment," said Dr Ashikur Rahman while presenting the keynote.
He said a lack of clarity over elections and smooth political transition has held back new commitments, with investors adopting a wait-and-see approach.
The weak investment climate is reflected in falling capital-machinery imports and a slowdown in construction activity.
High borrowing costs, timid credit growth, and cautious deposit mobilisation have further dampened the investment outlook.
He said poverty has risen as high inflation eroded real incomes and wage growth lagged behind price increases.
Tight monetary and fiscal policies, while stabilising the economy, slowed ADP spending and curtailed cash flow to low-income households, he noted.
Anwar-Ul-Alam Chowdhury (Parvez), President of Bangladesh Chamber of Industries (BCI), identified political uncertainty, energy shortages, and bureaucratic hurdles behind lower investment and job growth.
"Private-sector-credit growth has declined since 2023, forcing retail shops and small rural enterprises to shut down, while large industries report falling profits."
The slowdown in ADP project implementation has further reduced employment, pushing more people into poverty, he said.
Dr Nasiruddin Ahmed, former Chairman of the National Board of Revenue, criticized the audit practices of the NBR, calling for a more targeted computerised random audit system.
He emphasized separating policy formulation from implementation and highlighted rising business costs due to higher supplementary duties.
Habibullah N. Karim, Senior Vice President of MCCI, warns that extreme poverty and unemployment are alarming indicators of jobless growth, urging policy-driven incentives to boost ICT, agro-processing, and RMG sectors.
Dr Ahmad Ahsan, Director of PRI, cited historical lessons, noting that Bangladesh could have become a global manufacturing hub like Vietnam, but political uncertainty and weak policy implementation have limited growth. He stresses that stabilising the political environment is crucial to reducing uncertainty and reviving investment, employment, and overall economic growth.
Dr. Khurshid Alam expressed optimism that, despite various challenges, the Bangladeshi economy continues to move in the right direction.
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