Bangladesh’s challenges, though severe, are manageable if addressed through a coherent and forward-looking reform strategy.
DCCI President Taskin Ahmed has cautioned that Bangladesh is standing at a tightening economic crossroads, as the new government confronts slowing growth, persistent inflation, and mounting pressure on investment flows.
Addressing The Daily Observer’s National Print Dialogue, he stressed the need for a coherent, forward-looking reform strategy to navigate the prevailing challenges.
“If effectively implemented, the current transition could lay the groundwork for a more resilient, inclusive, and competitive economy�"restoring stability, revitalising growth, and ensuring a broader and more equitable distribution of development gains across society”, Ahmed said.
In a detailed written analysis, the DCCI chief said, Bangladesh has entered 2026 at a “pivotal inflection point” where economic management, political stability and external vulnerabilities are increasingly intertwined, warned the President of the Dhaka Chamber of Commerce and Industry (DCCI), outlining a challenging macroeconomic outlook marked by slowing growth, persistent inflation and fragile external balances.
“The new government’s promise is unfolding against a challenging macroeconomic backdrop, with GDP growth constrained to a projected 6.5%, inflation elevated at around 7.5%, and private investment weakening amid subdued demand, tighter credit conditions, and rising borrowing costs.”
He noted that foreign exchange reserves have stabilised compared to earlier declines but remain under pressure due to a high import bill�"particularly fuel and capital machinery�"alongside rising external debt obligations exceeding USD 78 billion as of February 2026.
The banking sector, he cautioned, remains a key structural weakness, burdened by non-performing loans estimated at Tk 5.57 trillion (around 30.6% of total outstanding loans), limiting credit flow to productive private sector activities and undermining investment recovery.
According to the analysis, these internal pressures are compounded by domestic political uncertainty and global geopolitical instability, particularly energy-related disruptions. As a net energy-importing economy, Bangladesh remains highly exposed to fluctuations in global oil and LNG prices, with recent energy adjustments increasing production costs, weakening industrial competitiveness and intensifying inflationary pressure on households.
Investment slowdown and policy dilemma
The DCCI President warned that private sector credit growth has fallen to a 22-year low of 6.1% in December 2025, reflecting liquidity constraints and high interest rates that are suppressing entrepreneurship and job creation. Private investment, he added, has declined steadily from 24.18% of GDP in FY2023 to 22.48% in FY2025.
He cautioned that overly contractionary monetary policy could deepen the growth slowdown, urging a balanced approach combining inflation control with targeted supply-side interventions such as improved food supply management, market monitoring and streamlined import facilitation for essential goods.
Five critical policy tests
The analysis identified five key policy challenges for the government:
First, whether inflation can be controlled without undermining growth; second, whether structural reforms can proceed without worsening inequality; third, whether macroeconomic stability can be maintained amid difficult adjustments such as exchange rate flexibility and energy pricing reforms; fourth, whether economic recovery can translate into improved household welfare rather than headline indicators alone; and fifth, whether political consensus can be sustained to implement sensitive reforms.
The DCCI chief stressed that without adequate social protection, reforms in taxation, subsidies and banking governance risk disproportionately affecting low-income households.
Reform priorities outlined
To address these challenges, he proposed a coordinated policy framework combining moderate monetary tightening with fiscal discipline that protects pro-poor and growth-enhancing spending.
Key recommendations include broadening the tax base, improving compliance through automation, strengthening domestic revenue mobilisation, and reducing reliance on borrowing to create fiscal space for development.
In the external sector, he called for greater exchange rate flexibility, export diversification beyond ready-made garments, and stronger remittance inflows through formal channels, alongside improved logistics and trade facilitation.
On energy, he urged a medium- to long-term diversification strategy focusing on renewable energy investment, regional cooperation, efficiency gains and improved sector governance to reduce costs and enhance reliability.
Banking and institutional reform
His analysis emphasised urgent banking sector reforms to improve asset quality, strengthen regulatory oversight and restore confidence in credit allocation. Special focus, he said, must be placed on improving access to finance for SMEs and emerging sectors.
He also underscored the importance of institutional strengthening, policy coordination and greater transparency in data and decision-making to enhance investor confidence and policy predictability.
Outlook
Concluding his assessment, the DCCI President said Bangladesh’s challenges, though severe, are manageable if addressed through a coherent and forward-looking reform strategy.
If effectively implemented, he noted, the current transition could lay the foundation for a more resilient, inclusive and competitive economy�"one that restores stability, revives growth and ensures broader distribution of development benefits across society.
