The New Year is beginning with the challenge of pulling the economy back from the brink of collapse due to money laundering, corruption, misrule and looting. Economists and analysts believe that old crises such as stagnation in business and trade due to political instability, labour dissatisfaction in industry, negative trends in investment and employment, huge defaulted loans, high inflation, and instability in the dollar market will continue to plague the economy in the New Year.
They say that economic recovery will depend on political stability and the government's policy measures.
The New Year has begun with this pressure on the economy. The question is, will there be relief in 2025? There are many challenges. However, this is the right time to implement reform measures and walk a new path.
Former caretaker government Adviser Dr Hossain Zillur Rahman said, "During the Shiekh Hasina government, inflation was not acknowledged. The interim government is acknowledging the reality of inflation, that is true. But this acknowledgement cannot be an end in itself. Framing and applying policy is one thing and increasing production is a different matter. But here I see bureaucratic inertia."
Meanwhile, investment has stalled due to various uncertainties. Gross domestic product or growth has decreased. Several lending institutions have reduced the GDP rate with the government. The question is, will the investment drought be cut in the New Year?
The Adviser to the former caretaker government said, "The wheels of the economy need to turn more vigorously. Employment needs to be created. Investment needs to be encouraged. There is a spirit of initiative at various levels within the country and nation. The first condition is to talk, the macroeconomics is in a fragile state. Efforts are being made to turn it around, that is one of them. But in this situation, we have to do the work of moving up further."
The banking sector was in distress throughout the year. Defaulted loans have set a record. The boards of several banks have been dissolved in a changed state. Despite the controversy, the central bank has printed money to save weak banks. Will the banking sector turn around in the New Year?
Former chief economist of the World Bank Dhaka office Dr Zahid Hossain said that if the initiatives taken, the laws are implemented, and if credible findings are obtained from them, then on the basis of these initiatives, weak institutions can be taken towards some kind of settlement. Then the health of banking will improve.
There has been unprecedented looting in the financial sector in the decade of Sheikh Hasina's government. The solid foundation of the economy has gradually weakened. Various inconsistencies have emerged in the economic white paper prepared by the interim government. Reform measures need to be implemented in the new year to overcome the crisis.
Dr Zahid Hossain said, "The budget deficit is Tk 2.6 trillion now, in the future, I am hearing, it may be the same or slightly more than Tk 3 trillion. Then money will have to be raised from the budget again to finance the deficit. In that case, there will be pressure on the credit flow to the private sector. So there are various types of trade-offs here, how that is managed is a big challenge."
The only good news in the outgoing year is that continuous agricultural production has ensured food security. Remittances and export earnings brought relief to the economy in the 24th.
According to the latest estimates of the Bureau of Statistics, overall inflation was more than 10 per cent in 2024. There was controversy over the calculation of this inflation. After the change of government, this inflation has stood at an average of 11 per cent. And food inflation has recently reached 13.88 per cent. But the national wage rate has been stuck at 8 per cent for several months. People's income is increasing at a lower rate than inflation, and people's suffering is increasing. After the new government came to power, despite taking other steps including increasing interest rates and reducing some taxes, inflation could not be brought under control.
Fahmida Khatun, executive director of the Center for Policy Dialogue, a private research organization, said that the extent to which the economy has deteriorated in the last two to three years will continue next year as well. It will take time to recover from the bad state the economy has fallen. The Ministry of Finance and the Central Bank have taken several steps after the July mass upsurge. Inflation, decline in reserves, looting of the financial sector, stagnation in investment - all of these have weakened the macroeconomic situation.
Bangladesh Bank Governor Ahsan H Mansur has warned that non-performing loans in the banking sector will be close to double the current level within six months.
He said, we are conducting a health check of the country's financial sector. Non-performing loans will reach 25 to 30 per cent in the future, which is now 12.5 per cent. Next month, it may reach 15 per cent, then 17 per cent and gradually reach 30 per cent.
Mohiuddin, former director of the ready-made garment owners' organization BGMEA, said, "Maintaining the growth of the ready-made garment sector in the New Year will be challenging. Our political uncertainty has somewhat damaged the country's image. Many of our owners could not run factories properly due to security reasons. Due to these reasons, the confidence of buyers has decreased somewhat. Along with this, there are various conspiracies from various domestic and foreign parties. It was a big challenge to bring exports on track by facing all these."
Various industrial groups, medium and small entrepreneurs have also come to a standstill in their business and trade. Traders have almost no LC. Many have stopped their business and trade. There is no sale in grocery stores and sidewalks. Due to the lack of business, there is no flow of money among the people. New investments are not coming to the country. Employment is not increasing. There is a possibility that the impact of the dollar crisis and high interest rates on loans will increase in the New Year as well. The impact of this situation may remain in the new year as well.
Mohammad Hatem, president of the ready-made garment owners' organization BKMEA, said that increasing the policy interest rate means increasing the interest rate on bank loans.
As a result of increasing the policy interest rate, it has increased even more. Now, there is no new investment, the business community is struggling to survive. When the interest rate of the bank increases, all the calculations are turned upside down. Because the installment amount increases and the profit rate decreases.
Khandaker Golam Moazzem, research director of the private research organization Center for Policy Dialogue (CPD), said that in the next two years, there will be three types of risks in the country's economy. In addition, corruption, inflation. The country's business and trade will be disrupted by 17 types of obstacles, including high tax rates.
Mashrur Riaz, Chairman of the private research organization Policy Exchange, said, "We are starting the new year with difficult economic realities. On the one hand, there are widespread problems in the macroeconomic environment that have been going on for two and a half years - where we are in serious trouble with inflation, balance of payments, foreign exchange prices, as well as the banking sector."
