"Private Sector Falters Amid Shrinking Capabilities"

Bangla Press Desk:   Bangladesh’s private sector, the main driver of the economy, has lost momentum amid prolonged macroeconomic instability, high interest rates, an acute energy crisis and a sharp rise in the US dollar. Entrepreneurs say they now look to the new government’s policy direction to restore confidence and pull the stagnant economy back on track.

Economists warn that the country cannot achieve the desired growth unless authorities restore macroeconomic stability and quickly rebuild trust among private investors.

The private sector contributes between 78 and 86 % to GDP and generates nearly 95 % of total employment. Yet Bangladesh Bank data show that private sector credit growth fell to 6.1 % in December 2025, the lowest level in 22 years. Borrowing costs have surged to 16-17 %, which has discouraged new investment and slowed job creation.

Entrepreneurs describe the economic slowdown inherited from the interim administration as a major challenge for the new political government. They cite a record non-performing loan ratio of 35.73 %, stagnant investment and a confidence crisis in the banking sector as key obstacles.

According to the Bangladesh Bureau of Statistics, private investment stands at 22.48 % of GDP in the current fiscal year, the lowest in five years. Business leaders say this decline has directly affected employment.

Taskin Ahmed, president of the Dhaka Chamber of Commerce and Industry, said high policy rates have forced businesses to borrow at 16-17 % interest, which discourages fresh investment. He added that many factories now use less than half of their production capacity, pushing them towards losses.

Energy shortages have compounded the crisis. Businesses report frequent gas and electricity disruptions that hamper production. Rising gas prices have also made it harder to meet domestic and export targets.

The dollar has climbed beyond Tk 122, raising the cost of raw material and capital machinery imports. Finance and Planning Minister Amir Khasru Mahmud Chowdhury has acknowledged that the private sector has reduced capital machinery imports, which in turn has lowered borrowing.

Political uncertainty and deteriorating law and order have further weakened business confidence. Taskin Ahmed said extortion increased significantly during the interim period and warned that corruption and instability threaten economic recovery.

The International Monetary Fund reported that foreign direct investment dropped by 61.53 % amid the instability. Industry leaders say many companies now struggle to survive by cutting production, laying off workers and suspending new projects.

Data from the Bangladesh Garment Manufacturers and Exporters Association show that 353 factories closed in Savar, Gazipur, Chattogram, Narayanganj and Narsingdi, leaving 119,842 workers unemployed.

Mahmud Hasan Babu, president of BGMEA, said the industry missed opportunities during the past 18 months due to policy gaps and weak engagement at the decision-making level. He noted that Bangladesh could have benefited from US tariff measures on China and India but failed to capitalise on the shift.

Former BKMEA president Fazlul Hoque said private sector credit growth has dropped to around 6 % while interest rates have doubled. He stressed the need to improve law and order, curb extortion and strengthen dialogue with the prime minister.

Anwar-ul Alam Chowdhury (Parvez), president of the Bangladesh Chamber of Industries, said the arrival of an elected government has sent a positive signal. He urged authorities to engage business leaders in policy discussions and adopt realistic measures.

The Foreign Investors’ Chamber of Commerce and Industry called on the government to rebuild investor confidence, ease business operations and ensure policy transparency. Its president, Rupali Haque Chowdhury, said FDI plays a critical role in sustainable growth and job creation.

The public-private dialogue platform BUILD said the government must prioritise restoring macroeconomic stability, controlling inflation, ensuring a sustainable exchange rate and improving banking liquidity. It also called for reducing the cost of doing business, rationalising tariffs and simplifying trade procedures ahead of LDC graduation.

Finance Minister Amir Khasru Mahmud Chowdhury has acknowledged the economic challenges and said the government will take bold measures under its reform programme to accelerate growth and ensure that benefits reach citizens.

Business leaders say structured dialogue and decisive reforms could revive momentum. They warn that without swift action, poverty and unemployment may rise further, deepening the economic strain.Source: daily Sun

BP/SP