PRI urges strong political will for reforms as Bangladesh’s economy stabilises but growth slows
The ongoing stabilisation process is particularly costly for the poor, while the wealthy are better positioned to cope, says the PRI principal economist
Bangladesh's economy is showing signs of stabilisation amid easing inflation and steady remittance inflows, though overall growth remains subdued due to weak investment and sluggish domestic demand, according to the Policy Research Institute (PRI).
Presenting the findings at an event today (29 October), PRI Principal Economist Dr Ashikur Rahman said, "Both the interim and upcoming elected governments must demonstrate strong political commitment to monetary and fiscal reforms while safeguarding Bangladesh Bank's independence."
He pointed out that central bank autonomy has eroded in recent years, contributing to rising non-performing loans (NPLs) and a fragile financial system. "NPLs reached a record Tk4.2 trillion in March 2025, a 21.6% increase from December 2024."
Keep updated, follow The Business Standard's Google news channel
The economist also warned that the slowdown in growth is likely to increase both poverty and inequality, noting that "the ongoing stabilisation process is particularly costly for the poor, while the wealthy are better positioned to cope."
He added that future poverty reduction will depend on how effectively the next elected government expands and ensures the efficiency of social protection programmes.
"The credibility of monetary policy depends on central bank independence," he said, adding that Bangladesh's low tax-to-GDP ratio of 6.6 percent—the lowest in the region—remains a major obstacle to achieving the country's development ambitions.
Presiding over the event, PRI Chairman Dr Zaidi Sattar said Bangladesh has the potential to achieve over 5% growth with an investment-to-GDP ratio of 29%, but global institutions have revised down their forecasts.
"While macroeconomic stability has modestly improved, external indicators such as the balance of payments and foreign exchange reserves are now in a comfortable position, supported by a flexible exchange rate," he added.
Dr Monzur Hossain, member (secretary) of the General Economics Division (GED) of the Planning Commission, attended as the chief guest. He stressed that investment depends on the broader economic ecosystem and cautioned that high interest rates, while helping to contain inflation, may be discouraging private investment.
