At first glance, Bangladesh appears to be regaining its economic stability. Government officials cite a rebound in foreign direct investment, stabilising reserves and a modest export recovery as signs of resilience.
But beneath this surface of optimism lies a far more fragile reality—one marked by rising inflation, eroding purchasing power, weakening investor confidence and deep fundamental flaws in the financial system.
The International Monetary Fund (IMF), in its October 2025 Country Report, acknowledged the government's reform efforts and macroeconomic management.
Yet it also identified three deep-seated vulnerabilities: persistently weak tax revenues, fundamental fragility in the financial sector and high inflation. These are not distant challenges—they strike at the very foundation of the economy.
Prior to the political unrest of 2024, Bangladesh was also not on a strong economic path. This was despite 2022, when the country recorded a 7.10 percent GDP growth rate (Bangladesh Bureau of Statistics, 2023), and its per capita income surpassed that of several regional peers, including India (World Bank, 2022).
Between 2006 and 2022, the poverty rate dropped from 41.5 percent to 18.7 percent, according to the World Bank Poverty & Equity Brief (April 2023).
In the last fiscal year (FY 2024–25), GDP growth slowed to 3.97 percent, according to Bangladesh Bank's Economic Review (October 2025)—far below the decade-long average of about 6 percent.
The poverty rate, based on the international $3/day (2021 PPP) threshold, is projected to rise to 8.9 percent, pushing an estimated 1.2 million people into vulnerability, according to the World Bank Macro Poverty Outlook, October 2025.
Extreme poverty in Dhaka is forecast to rise to 9.3 percent, likely affecting roughly 3 million people.
Investor confidence has also deteriorated.
In March 2025, Moody's Investors Service downgraded Bangladesh's banking system outlook from stable to negative, citing elevated credit risks, deteriorating macroeconomic conditions and political instability (Moody's Banking Outlook: South Asia, March 2025).
While headline inflation has eased marginally due to a fall in food prices, non-food inflation rose to 9.13 percent in October 2025, up from 8.98 percent in September.
Living costs have continued to climb. House rents, transport fares and household essentials have become increasingly unaffordable.
The employment rate dropped to 56.7 percent in 2024, with job losses most visible in the service sector, according to the Labour Force Survey 2024 (preliminary) of BBS. Wage growth has stagnated, while inflation continues to erode purchasing power.
On the financial front, Bangladesh now holds the highest non-performing loan (NPL) ratio in Asia. According to the Asian Development Bank's Financial Stability Monitor (2025), NPLs rose to 20.2 percent of total loans in 2024.
Non-bank financial institutions (NBFIs) have fared even worse, with bad loans increasing to 33.83 percent and their Capital to Risk-Weighted Asset Ratio (CRAR) turning negative at 6.46 percent.
These figures indicate deep structural weaknesses in the financial system. Deposits have slowed, and many banks are struggling to meet reserve requirements, further restricting credit flow to the private sector.
The ready-made garment (RMG) sector—long the backbone of Bangladesh's exports—is also showing signs of strain.
Export earnings have declined for three consecutive months, according to Export Promotion Bureau (EPB) data: by 2.93 percent in August, 4.61 percent in September and 7.43 percent in October 2025. Woven garment exports dropped by 5.33 percent, and knitwear exports fell by 10.76 percent in October.
Industry insiders, including BGMEA and BKMEA, point to a range of factors: global tariff pressures, loss of competitiveness and the rise of China-backed African textile hubs. Concerns have also been raised over the withdrawal of government support during peak export periods.
As it stands, the picture is mixed. There are isolated gains, but also serious warning signs. To move forward, the country needs more than reassurance—it needs stability, transparency and decisive, data-driven policymaking.