For Bangladesh, 2025 was less a year of recovery than one of survival. The interim government’s overriding objective was to prevent a full-scale economic collapse—and on that narrow count, it succeeded.
But the cost of stability has been steep: growth slowed sharply, investment dried up, jobs vanished, and public confidence remained fragile.
While select macro indicators showed improvement—most notably foreign exchange reserves and remittance inflows—the deeper structural problems of the economy intensified.
A stressed banking sector, weak private investment, stubborn inflation pressures, employment contraction and export shocks defined the year.
Stabilization at a cost
Economists broadly agree that the government managed to stop the economy from sliding into a balance-of-payments crisis. But they also warn that the stabilization was achieved through high interest rates, tight monetary policy and fiscal restraint—measures that choked industrial activity and trade.
“The economy has been kept afloat, but not revived,” said former lead economist at the World Bank Dhaka Office Dr Zahid Hussain.
High inflation, financial sector fragility, weak investment and stagnant employment remain unresolved, he added.
The most glaring weakness of 2025 was the collapse in investment. Private sector credit growth fell to just 6.23% in October, the lowest in four years, reflecting high interest rates, dollar shortages and policy uncertainty. Instead of expanding, many businesses focused on survival.
Foreign direct investment also remained stuck below 1% of GDP, limiting diversification and quality job creation.
“There is no environment for business expansion,” said Shams Mahmud, former president of the Dhaka Chamber of Commerce and Industry. “High interest rates, taxes and VAT, along with difficulty accessing bank loans, have discouraged new ventures.”
Imports of capital machinery fell, signalling declining confidence in future production.
Banking crisis takes centre stage
For bank customers, 2025 was a year of anxiety. Liquidity shortages in several banks prevented depositors from withdrawing funds, particularly in five Islamic banks where savings remained frozen for months.
The situation worsened as non-performing loans (NPLs) surged to 35.73% of total loans by September 2025—up from 16.93% a year earlier.
Analysts argue that tighter rules exposed long-hidden bad loans once rescheduling facilities were curtailed.
This banking distress hurt investment, delayed import payments and disrupted salary disbursements, amplifying pressure on growth and revenue collection.
Although Bangladesh Bank amended deposit insurance rules to protect small depositors, confidence has yet to fully return.
Inflation eases on paper, not in life
Inflation showed statistical improvement but failed to ease household distress.
According to BBS, food inflation declined to 7.36% in November and overall inflation to 8.29%.
Yet market prices told a different story.
Rice prices rose by Tk5–7 per kg over the year, edible oil by over Tk20 per litre, while onion prices spiked as high as Tk170 per kg before easing. Vegetables, fish and transport costs remained elevated.
“The real purchasing power of people is still falling,” said CPD Executive Director Dr Fahmida Khatun. “Wage growth has stagnated even as prices remain high, pushing the economy toward a low-level equilibrium.”
Low- and middle-income families continued to struggle as food, rent, healthcare and education consumed most of their earnings.
Employment crisis worsens
The labour market delivered little hope in 2025. Factory closures, layoffs and weak growth deepened unemployment in both formal and informal sectors.
Government data show 245 factories closed between August 2024 and July 2025, affecting nearly 100,000 workers. While new factories opened, most were small-scale and insufficient to offset losses.
According to the Labour Force Survey 2024, total employment fell by 1.74 million, with women accounting for 94% of the losses.
“This directly challenges Bangladesh’s inclusive development model,” said Dr Fahmida Khatun. “The economy is losing jobs even as education levels rise.”
Rizwanul Islam, former ILO adviser, warned that Bangladesh is drifting from “jobless growth” to a “growthless and jobless” economy, with real wages declining.
Graduate unemployment rose sharply, creating long-term risks for social stability and human capital.
Exports hit by multiple shocks
Exports, especially ready-made garments (RMG), suffered from overlapping crises. Tariff threats from the US, labour unrest, factory shutdowns, customs disruptions and a devastating airport cargo fire that destroyed nearly $1 billion in garments all weighed heavily.
From January to November 2025, exports stood at $35.59 billion, growing only 2.53 percent, compared with 6.23 percent growth a year earlier. Matching 2024’s performance would have required unrealistically high December exports.
“Bangladesh’s price advantage is eroding,” said former BGMEA director Mohiuddin Rubel, citing rising production costs, limited product diversification and global uncertainty.
Government borrowing raises concerns
As revenue pressures mounted, the government increasingly turned to bank borrowing. Net borrowing from scheduled banks jumped sharply in late November, raising fears of crowding out private investment.
“When the government borrows heavily, the private sector suffers,” warned BKMEA President Mohammad Hatem. “Liquidity tightens and interest rates rise further.”
Capital market under strain
The stock market reflected the broader malaise. The DSEX index fell about 7% in 2025 amid political uncertainty, weak reforms and a fragile banking sector.
No IPOs were launched during the year, leaving investors trapped in weak shares. Bank mergers and closures wiped out an estimated Tk5,500 crore in shareholder value, further eroding confidence.
IMF support brings breathing space
One bright spot was continued engagement with the IMF. After tense negotiations, Bangladesh secured around $3 billion in multilateral support by mid-year, unlocking budget assistance from other lenders.
The program required painful reforms—market-based exchange rates, subsidy cuts and revenue measures—but provided crucial “economic oxygen.”
Foreign exchange reserves rebounded to $32.75 billion, while the taka stabilized around Tk120-Tk122 per dollar.
In the first four months of the fiscal year, Bangladesh recorded a $1 billion current account surplus, reversing last year’s deficit.
Remittances rose 17.14% year-on-year to $13.04 billion during July–November, while overseas employment increased significantly.
The interim government calls 2025 a “return to stability.” Economists are more cautious. While reserves recovered and inflation eased statistically, the economy paid a heavy price in lost growth, jobs and confidence.
Bangladesh exits 2025 more stable than it entered—but still far from recovery. Without restoring investment, repairing banks and creating quality jobs, survival risks becoming the new normal rather than a bridge to renewal.
