—Mostofa Kamal—

Despite modest gains in reserves and strong remittance inflows, a sharp decline in industrial production and exports has undercut any optimism. Investment stagnation and rising anxiety in the business sector have brought the economy to a critical juncture. While some indicators hint at recovery, the core of the economy continues to bleed. With $21 billion in reserves weighed against over $100 billion in foreign debt, and half the national revenue consumed by interest payments, the cost of neglecting domestic production and job creation is becoming alarmingly evident.

Globally, informed nations, institutions and corporate firms often gauge a country’s economic health by looking at its capital market. In this critical area, Bangladesh lags behind, grappling with the longest market slump in its history. Disruptions to the commodity market are also evident. Although prices slightly stabilised before and during Ramadan, they have since started to rise again. Prices of daily necessities are climbing, and so is unemployment. Many factories have stopped hiring due to disruptions to production. Some companies are even unable to pay salaries on time, and layoffs are ongoing, adding new unemployed to the old.

Against this backdrop, the loud talk of GDP growth feels increasingly questionable. Government statistics claim the GDP growth rate is gradually increasing. However, questions remain: How real is this GDP growth, and how

much of it is consumer-based? Reducing expenses and hoarding under the mattress in the name of GDP doesn’t mean much to ordinary people. The current interim government has served for nearly one-fifth of an elected government’s term (nine months), yet macroeconomic indicators, especially the capital market, show little to no improvement. What have come in, however, are foreign loans, and those loans have already been spent on repayments. Remittances are coming in and are being deposited. Foreign currency also comes from import-related sectors. This has led to a slight recovery in reserves. But the state of exports is dire. The government, which assumed office on 8 August, should have immediately focused on boosting domestic production, initiating development-friendly activities through public-private partnerships, creating market competition and supporting small, medium and large businesses. While there has been discussion about strengthening the capital market as a primary and alternative source of investment, the actions taken so far have not been effective.

For inexplicable reasons, the government has neither increased industrial engagement nor taken steps to instil investor confidence or infuse momentum in the economy. Instead of winning over investors, it has kept them at arm’s length. As a result, the economy is now paying the price. Aside from being able to brag about remittances and export earnings, there is little to show in terms of visible achievements in macro economy. The hype around foreign loans has already turned sour. A record-breaking $2.75 billion in remittances came in April. Export earnings were $3.0168 billion. Simultaneously, however, non-performing loans (NPLs) hit record highs after 5 August. The revenue deficit stands at Tk656.65 billion. In the first nine months (July-March) of the current fiscal year, ADP (Annual Development Programme) implementation is just under 37% – the lowest in a decade. Though there’s no cause for satisfaction, an unwarranted sense of complacency and hype around the economy is still noticeable.

Meanwhile, the World Bank’s message is worrisome. They predict GDP growth will fall by the end of this year, possibly below 3.5%. This could force around 3 million people below the poverty line. One doesn’t need to be a seasoned economist to understand this. The reality is so stark that even slum dwellers are figuring out their own economic survival. People with moderate means are cutting back on food and essential goods. Businesspeople and investors are even more acutely aware of the situation. Many are now just spectators, standing on the sidelines. Ongoing investment woes have sapped the capacity for new ventures. With production suffering, exports are on the verge of collapse. Businesses are struggling just to stay afloat.

This April recorded the lowest export earnings of the 2024-25 fiscal year. According to the Export Promotion Bureau (EPB), export income was $3.01 billion, which is only a 0.86% increase compared to the same period last year. This is the lowest monthly export figure of the fiscal year. Previously, the lowest figure was in September – $3.52 billion. In contrast, March saw exports of $4.25 billion. Fears of further decline in production and exports are looming. The gas crisis has dealt a heavy blow. The supply is 40% less than the demand. Factories across all major industrial zones – Dhaka, Gazipur, Narayanganj, Savar, Ashulia, Bhaluka – are in dire straits. Getting gas during the daytime is now a matter of luck. And yet, gas prices have increased by over 300% over the past few years, based on promises of uninterrupted supply.

With no work due to the gas shortage, workers of many factories are idle during the day. If gas pressure increases late at night or early in the morning, calling workers back with overtime pay becomes a major challenge – something only suffering factory owners and investors can truly understand. The garment and textile sector has been hit hard. The $70 billion investment in this sector is now at risk. In some places, production is being kept alive using CNG, LPG, or diesel, doubling the cost. Due to the rising costs, some factories have shut down. Without stable production, global buyers have to fly goods in via air cargo to meet delivery timelines, resulting in massive financial losses for exporters.

Beyond garments, industries like steel, ceramics and food processing are also reeling from the situation. The distress in these factories is beyond imagination. Financial incentives alone are not enough: policy support and good governance could provide significant relief. However, policy support has been consistently overlooked. Some in the government seem to be walking a disconnected path. By pushing the private sector – businesses and entrepreneurs – into crisis, the economy’s core is being crushed. This won’t help circulate blood through the economy. Everyone understands: without a thriving industrial sector and active investment, economic growth will stall. Entrepreneurs fear that unless gas supply increases immediately, domestic production will fall further and export earnings will take a sharp hit, worsening the dollar crisis.

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Writer: Journalist-Columnist. Deputy Head of News, Banglavision