Bangladesh - Looking forward with optimism

Bangladesh aiming for sustainable growth and stability

Bangladesh stands at a crossroads in 2025 - facing both significant opportunities and formidable challenges. Recognised globally for its economic potential, the country has been named "Country of the Year" by The Economist. However, this recognition does not mask the pressing economic, political, and social issues that must be addressed to ensure sustainable growth and stability. This report notes the key opportunities Bangladesh can leverage while identifying critical challenges that require urgent attention.

Economic opportunities and growth potential

Despite the challenges, Bangladesh has notable economic strengths that can be capitalised on to drive future growth:

1. Strong export and remittance sectors – The country's export industry, particularly in textiles and garments, is poised for robust performance. Additionally, remittances from overseas workers provide a vital source of foreign exchange, which can help stabilise the economy.

2. Youth-driven economic transformation – With a large and dynamic young population, Bangladesh has the potential to harness innovation and entrepreneurship to diversify its economy and reduce dependence on traditional industries.

3. Infrastructure and digital advancements – Continued investment in infrastructure projects, such as transport and energy, alongside rapid digital transformation, will enhance productivity and attract foreign investment.

4. Strategic geographic location – Bangladesh's position as a gateway between South and Southeast Asia offers significant trade and logistics opportunities, strengthening its role in regional economic integration.

Key economic challenges

While opportunities exist, structural and policy-related challenges need to be addressed:

1. Persistent inflation and economic instability – Inflation has remained above 9% since March 2023, straining household finances and limiting consumer spending.

2. Weak private investment and financial sector risks – Low private sector investment, coupled with high levels of non-performing loans, has created financial instability that requires urgent reforms in banking and credit markets.

3. Foreign exchange constraints – The country continues to face a shortage of foreign exchange, making it difficult to support imports and sustain economic growth.

4. Regulatory and governance issues – Corruption, bureaucratic inefficiencies, and inconsistent economic policies have deterred investment and slowed economic reforms.

Political and governance considerations

Political stability is essential for sustainable economic growth, yet Bangladesh is experiencing heightened political uncertainty:

1. Shifting political landscape – The interim government faces pressure from multiple factions, including students demanding justice and political parties calling for an electoral roadmap.

2. Public dissatisfaction with governance – Concerns over crime, governance transparency, and the government's economic policies have fuelled discontent.

3. Need for political reform – Political parties must move away from outdated models of patronage and control to build a system based on democratic participation and accountability.

4. The role of students and youth activism – Students have played a critical role in driving political movements. Their engagement must be recognised and integrated into meaningful political dialogue.

Social challenges and inclusivity

Addressing social inequalities and ensuring inclusivity is essential for long-term stability and prosperity:

1. The role of women in leadership – Women have played a pivotal role in recent political movements, yet they remain underrepresented in leadership positions. Greater efforts are needed to ensure their participation in all sectors of society.

2. Protection of marginalised communities – Minority and disadvantaged groups continue to face discrimination and violence. Legal and policy measures must be implemented to ensure their safety and inclusion.

3. Strengthening the rule of law – Law enforcement agencies must undergo reforms to shift from being instruments of political control to upholding justice and public safety.

4. Religious and political inclusivity – Islamist parties and other political groups must embrace pluralism and reject divisive rhetoric to foster a more inclusive democracy.

Institutional reforms for sustainable development

Bangladesh’s long-term stability depends on deep institutional reforms, including:

1. Strengthening the election process – Reforms in the Election Commission are needed to ensure free and fair elections, restoring public confidence in the democratic system.

2. Judicial and anti-corruption reforms – The judiciary and the Anti-Corruption Commission must operate independently to uphold the rule of law and combat financial misconduct.

3. Economic and financial sector restructuring – Addressing banking sector vulnerabilities, enhancing transparency, and supporting small businesses will be critical for economic recovery.

4. Ensuring media freedom – A free and independent press is essential to democracy. Protecting journalists and promoting media transparency will help keep the government accountable.

Conclusion

Bangladesh has remarkable opportunities for economic and political advancement. However, these opportunities can only be realised through decisive action on key challenges. Economic stabilisation, political reform, social inclusion, and institutional strengthening must be prioritised to create a sustainable and prosperous future. By addressing these issues, Bangladesh can move towards a resilient and inclusive economy while reinforcing its democratic foundations.