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Bangladesh’s economy is continuing to go through difficulties with slow export growth, high inflation, stagnant investment, and the absence of any positive changes in employment generation, end of 2025 data shows.
However, there are tailwinds too. The country’s remittance inflow is promising while foreign currency reserves are at a significant level, with the exchange rate remaining stable.
Analysts think that the Southeast Asian country’s economy may make a turnaround once a new government takes office through national elections in February. Political uncertainty almost always keeps investors away.
The World Bank on January 15 forecasted that Bangladesh’s economic growth will stand at around 4.6% at the end of this fiscal year, slashing last June’s projection by 0.3 percentage points amid persistent inflation, falling exports, and sluggish investment.
The latest World Bank projection is consistent with forecasts made by other development partners, including the Asian Development Bank (ADB), which also cited sluggish investment, slower export growth and political uncertainty.
A World Bank report mentioned that inflation has remained above target, and monetary policy has been tight, while demand for credit has been reduced amid subdued business activity and heightened borrowing costs.
The report also mentioned that the exchange rate has stabilised since mid-2025, partly reflecting the adoption of a more flexible currency regime in May.
“In Bangladesh, an expected reform-driven increase in revenue collection is projected to offset a rise in expenditure following the formation of a new government,” said the World Bank report.
Apparel exports continue to fall
Since June 2025, apparel export growth has continued falling, data shows. In the just concluded calendar year export grew marginally by only 0.89% to $38.8 billion compared to 7.23% YoY growth in 2024 to $38.5 billion.
Apparel is the main foreign currency earning sector for Bangladesh. The industry people attribute various external and internal shocks behind the fall in ready-made garments export growth. Several negative shocks have shaped 2025 export trends: tariff threats and order freezes from key markets, especially the US, have created extra pressure and uncertainty.
“Political instability and regime change have weakened business confidence and disrupted normal trade flows,” according to Mohiuddin Rubel, a former director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
He said that labour unrest, including road blockades and factory closures, has interrupted production and deliveries. The country has, for the first time, seen a complete shutdown of the customs house — an event that is rare globally.
A major airport cargo fire last year destroyed around $1 billion in garment shipments, directly cutting export earnings. At the same time, the removal of export incentives and high domestic inflation have pushed up production costs and eroded competitiveness, making it harder for Bangladeshi exporters to sustain price advantages.
“Together, these factors constrained export growth in 2025, keeping it below [the previous] year’s trajectory,” noted Rubel.
Current account deficit widens
The low export growth has resulted in the widening of current account deficit as at the same time import increased significantly in the recent months.
According to central bank data between July and November, the current fiscal year account deficit stood at $696 million, up by some $128 million from same period of last fiscal year.
Data shows, during the period crude oil import rose by 37%, refined oil import surged by 14% and capital machinery import increased by nearly 10% which led the widening of current account deficit.
Investment stagnant, inflation up
Both the foreign and private investment remains sluggish in Bangladesh throughout the last year as investors pursue a “wait and see” policy amid political uncertainties.
The Centre for Policy Dialogue (CPD), a Dhaka based think tank on January 10 at a media briefing titled ‘State of the Bangladesh Economy in FY 2025-26: Multidimensional Risks at an Electoral Crossroads’ expressed concerns over the country’s sluggish investment scenario.
