Bangladesh, once known for a growing economy among South Asian countries, now faces mounting economic challenges that threaten its long term prospects. This is happening due to the ongoing political instability and various economic and political pressures from within and outside the country. This includes policy changes in the developed countries that put extraordinary pressure on our prospects. Other factors, such as slowing investment, job scarcity, rising inflation and weakening growth, have created a precarious situation for policymakers and citizens alike.
Private investment, a key driver of growth, has stagnated and created huge pressure on the lower-income households in the country. In FY2024-25, private investment fell to 22.48 per cent of GDP, its lowest level in five years, while capital machinery imports dropped 26 per cent year-on-year. Uncertainty over political stability, high borrowing costs, and regulatory hurdles has left both domestic and foreign investors hesitant, slowing Bangladesh's long-term development momentum.
Meanwhile, the job market struggles to absorb a growing workforce that is rising every year, compared to the creation of jobs. Around 1.8 - 2.0 million young Bangladeshis enter the labour market each year, yet unemployment persists at 4.6 per cent overall, with graduate unemployment rising to 13.5 per cent.
At the same time, inflation continues to erode household purchasing power. Consumer prices have climbed to 8.3-8.36 per cent, making essentials like rice, edible oil and rent increasingly unaffordable. Real wages have stagnated and over 23 million people face acute food insecurity, highlighting the human cost of these economic pressures.
The result is slowing GDP growth. The World Bank projects 4.8 per cent GDP growth for FY2025-26, well below the decade-long averages needed to create jobs and sustain rising living standards. Economists warn of early signs of "stagflation"- slow growth alongside persistent inflation --- a dangerous mix that threatens both economic stability and public confidence.
Addressing these intertwined challenges requires urgent and bold action for revitalising investor confidence through political stability and regulatory clarity, aligning workforce skills with market demand, and strengthening social safety nets to protect vulnerable households.
Sudarshan Kundu
skundu747@gmail.com
