Bangladesh must prioritize boosting investment, strengthening energy supply, and supporting private sector growth to generate jobs for its expanding workforce, economists and business leaders said at a recent policy dialogue.
they also called for decisive action against willful loan defaulters and deeper ?nancial sector reforms, warning that the country’s banking system remains fragile amid rising nonperforming loans and weak credit growth.
the observations were made at a roundtable titled ‘Looking into Bangladesh’s development: priorities for the newly elected government in the short term to medium term,’ jointly organized by the Centre for Policy Dialogue (CPD) and The Daily Star in Dhaka.
economy under Strain Speaking at the event, Sadiq Ahmed, vice chairman of the Policy Research Institute of Bangladesh, said the country is facing a precarious economic situation. GDP growth slowed to around 3.5 percent in ?scal year 2024-25, while unemployment among educated youth has climbed above 10 percent. Poverty is also rising, underemployment remains widespread, and in?ation persists at about 8.5 percent-nearly three times the global average. Moderating the discussion, CPD Executive Director Fahmida Khatun said weak private investment and declining credit growth are limiting economic expansion and employment opportunities. She emphasized that improving the investment climate and revitalizing private sector activity are essential for job creation. Restoring macroeconomic stability, ensuring policy predictability, and reducing regulatory complexity would help attract both domestic and foreign investment, she said. Fahmida also highlighted the need to expand the tax base and strengthen governance in the ?nancial sector to support sustainable growth. M Masrur Reza, chairman and CEO of Policy Exchange Bangladesh, said the new government has inherited a fragile economy and must restore ?scal discipline, pointing to weak revenue mobilization, rising public debt, and inef?cient spending. Banking Sector Challenges Participants identi?ed the banking system as a major bottleneck to economic recovery. Nonperforming loans continue to rise, depositor con?dence has weakened, and private sector credit growth remains sluggish.
aK Azad, vice president of ICC Bangladesh, warned that heavy government borrowing from banks is crowding out private sector lending. He called for strict action against willful defaulters to restore discipline in the ?nancial system. Md Main Uddin, a professor at the University of Dhaka, criticized policies that allow repeated loan restructuring with minimal down payments, arguing that such measures only provide temporary relief.
energy and Policy Implementation Energy supply constraints were also highlighted as a major obstacle to industrial expansion. Sha?qul Alam, lead energy analyst at the Institute for Energy Economics and Financial Analysis, noted that Bangladesh’s growing dependence on imported fuel has increased vulnerability to global price shocks. He called for greater investment in domestic gas exploration, energy ef?ciency, and renewable power to ensure reliable electricity for industries. Mahfuz Anam, editor and publisher of The Daily Star, observed that Bangladesh often formulates sound policies but struggles with execution. Bureaucratic processes frequently slow decision-making and delay development projects, he said. He suggested expanding digitalization across ministries to improve ef?ciency and reduce irregularities, along with forming independent advisory groups to guide reforms. Business leaders also urged administrative reforms, including streamlining foreign investment approvals, introducing a single-window system, and strengthening support for small and medium enterprises as Bangladesh prepares to graduate from the Least Developed Country category.