Bangladesh's capital-machinery imports sustained another 16.06-percent fall in the 1st half of the current fiscal year (FY), signaling a deepening crisis in private-sector confidence and ongoing investment stagnation, according to sources.
The import value of capital machinery declined to US$904.59 million during the July-December period of the FY 2025-26 compared to $1.077 billion in the matching period of last fiscal, Bangladesh Bank (BB) statistics showed.
Analysts have attributed such a persistent declining trend in the capital machinery to the country's prevailing sluggish investment situation and slower industrial expansion.
Although the settlements (actual payments) for machinery imports remained down, some recent data showed a slight uptrend in the opening of fresh letters of credit (LCs) for the same in the early months of the fiscal year.
According to the BB data, although the local importers had opened LCs at a higher rate in the H1 this fiscal but their settlements ultimately showed a negative trajectory over the corresponding period of previous year.
The local investors opened LCs worth $1.079 billion during July-December period of the current FY2026, about 23.64 per cent up from that of $872.82 million in the corresponding period last FY2025.
BB officials and economists say since the country's investment has not been picked up at the expected level during the interim government, the rate of the capital machinery imports remained on a negative trajectory.
They also believe that the imports of the basic machinery for the investment would increase with the new political government taking office after the national elections, scheduled for February 12.
According to business people, the sluggishness in the country's economic activities still persists, hurting business expansion and employment badly.
Economic analysts and industry insiders suggest that the contraction is a direct reflection of a weak investment climate.
Meanwhile, the import of intermediate goods also declined by 13.05 per cent to US$1.91 billion during H1 of the current fiscal year from $2.199 billion in the corresponding period last FY2025 as there are some slowdown in secondary manufacturing like yarn, chemicals, and accessories.
The import of the raw materials remained almost stable during the H1 of this fiscal as the goods worth $1.188 billion were imported during July-December period of the current fiscal compared to $1.191 billion in the same period of last fiscal as existing factories were still running and meeting their existing orders.
Bankers said despite having a stable forex exchange rate and an adequate dollar liquidity, entrepreneurs are still hesitant to go for new projects or factory expansions.
Besides, with the policy rate elevated to combat inflation, the cost of borrowing has surged, making large-scale industrial investments less viable, according to them.
Businesses further said the prevailing concerns over the steady supply of gas and electricity have discouraged many entrepreneurs to set up new manufacturing units.
Many of the investors have adopted a "wait-and-see" approach, delaying their capital-intensive decisions until the political and regulatory environment show more long-term predictability, they said.
The decline in capital machinery--which includes factory equipment, production lines, and industrial tools--is often seen as a leading indicator of future economic health.
While other sectors like remittance and garment exports showed resilience, the stagnation in the manufacturing sector could slow down the country's overall GDP growth, which the World Bank recently projected at 4.6 per cent for the current fiscal year.
Without a rebound in the capital machinery imports, the country may face challenges in maintaining its industrial competitiveness as it prepares for its graduation from Least Developed Country (LDC) status in late 2026, they said.
Meanwhile, the capital-machinery import plummeted by 25.41 per cent in the FY2025 to $1.745 billion from $2.34 billion in FY2024, according to the central bank data.
Because of the steady rise in foreign exchange reserves, the commercial banks are not showing any reluctance to open LCs for the import of all goods on demand, according to the central bankers.
