Balancing power and progress in a fragmented world economy

The world in 2025 is navigating a complex, fast-changing and polarised geopolitical and economic landscape.

Global supply chains are no longer merely about efficiency; they have become pillars of national security, strategic control and economic resilience. Rising trade, technological and military rivalries are redefining the flow of international commerce. Within this vast canvas, Bangladesh's position as an emerging Asian economy demands careful, multidimensional analysis. Our geographic advantage, growth momentum and diplomatic prudence will shape our future in this new global order.

The post-2025 supply chain is no longer confined to the 'China-plus-one' model. It has evolved into ideas such as friend-shoring and diversification for resilience. Western economies now seek partners that not only offer cost-effective production but also align with their values, particularly environmental, social and governance (ESG) standards.

In this context, Bangladesh enjoys a distinct advantage. The ready-made garment sector's remarkable progress in compliance, workplace safety and the establishment of green factories has made the country a trusted alternative for global buyers. Reports from the International Labour Organization (ILO) and Unicef highlight Bangladesh's progress in eliminating child labour — a key factor for Western markets.

Yet, the challenge extends beyond garments. High-value and technology-driven sectors such as light engineering, pharmaceuticals and IT-enabled services must also ensure transparency and adherence to global standards. Expanding the use of advanced technologies, such as blockchain-based supply chain tracking, will be crucial to strengthening buyer confidence.

Geopolitically, Bangladesh's location in the Bay of Bengal places it at the centre of Indo-Pacific competition between China and India. The Bay serves as a vital trade artery where the United States, Japan and the European Union are intensifying their strategic presence to ensure a "free and open Indo-Pacific". For Bangladesh, the key lies in maintaining an independent, balanced foreign policy. China's Belt and Road Initiative (BRI) is expanding our physical infrastructure — particularly port capacity — while Western partners are prioritising governance, democracy and human rights in their investment agendas.

Rather than leaning too heavily on any single bloc, Bangladesh must evaluate each relationship through the lens of national economic interest. Projects such as the Matarbari deep-sea port demonstrate how multinational partnerships can help us become a neutral hub of regional connectivity — multiplying our diplomatic and economic leverage as a smaller economy.

Graduation from least developed country (LDC) status in 2026 will be a moment of pride, but it will also bring major structural challenges. The loss of duty-free access under the GSP scheme could impose tariffs of 6%–14% on key exports, threatening competitiveness. Bangladesh must therefore accelerate negotiations for preferential and free trade agreements with the EU, the UK and other major partners, supported by intensive capacity-building for trade negotiators.

Equally pressing is the impact of the expiry of TRIPS exemptions, which will increase production costs in the pharmaceutical sector, particularly for complex drugs. Proactive diplomacy is needed to secure bilateral arrangements that preserve some of these advantages.

Economic diversification remains the only durable answer. According to IMF and ADB forecasts, sustaining GDP growth will depend on attracting foreign investment and building domestic capacity in advanced technical textiles, agro-processing, medical devices and IT. In the first eight months of 2025, Bangladesh received investment proposals worth around $1.85 billion — their quick implementation now hinges on improving the ease of doing business and ensuring reliable energy supply.

Ultimately, resilience begins at home. High inflation, liquidity stress and rising non-performing loans are straining the macro-economy. Banking reform, greater transparency in revenue collection and prudent tax policy are essential — but must not overburden businesses. Initiatives such as the Bangladesh Single Window system should be implemented swiftly to simplify investment procedures and reduce bureaucratic friction.

Above all, political stability and an unwavering commitment to good governance will be decisive in restoring investor confidence, both domestic and foreign. Through disciplined reform, strategic diplomacy and institutional integrity, Bangladesh can not only preserve but strengthen its standing as a significant economic force on the global stage.