Bangladesh Banking to Dominate 2026 Agenda

As Bangladesh looks ahead to 2026, the country’s political and economic landscape appears poised at a critical juncture, marked by both renewed optimism and formidable structural challenges. The year is widely expected to open on a positive note under a democratic government, offering the promise of stability after a prolonged period of uncertainty. At the same time, Bangladesh will be grappling with the concrete realities of graduating from Least Developed Country (LDC) status, a transition that brings prestige but also the loss of certain trade privileges and concessional support.

These observations were shared by Professor Mustafizur Rahman, Distinguished Fellow of the Centre for Policy Dialogue (CPD), in an interview analysing Bangladesh’s economic outlook for 2026. According to him, the coming year will be pivotal, not least because it coincides with a democratic transition that could help restore confidence among investors and economic actors.

Professor Rahman noted that if elections are conducted credibly and peacefully, a long-standing cloud of uncertainty—particularly affecting private investment and long-term economic planning—could begin to lift. Such a shift would create space for progress in key areas, including employment generation, supply chain resilience and inflation management. These factors, taken together, could help stabilise the broader macroeconomic environment.

However, he cautioned that optimism must be matched by discipline. Although reform initiatives have already begun, their success will depend entirely on consistency and institutionalisation. Half-hearted implementation or policy reversals could push the economy back into distress. “Any relaxation at this stage risks undoing hard-won gains,” he warned, adding that returning to previous practices would be untenable.

One of the most pressing issues in 2026, Professor Rahman emphasised, will be the banking sector. Weak governance, rising non-performing loans and limited regulatory enforcement have long undermined financial stability. Without deep and credible reform, the banking system could become the single largest obstacle to sustainable growth, particularly as Bangladesh enters a more competitive post-LDC global environment.

The formation of a new government after the elections may provide an opportunity to refocus on economic management, as election-driven pressures subside. This could allow policymakers to prioritise difficult but necessary reforms. Yet several entrenched challenges will persist, including limited institutional capacity, high costs of doing business and insufficient international competitiveness.

The table below summarises the main opportunities and challenges expected in 2026:

In sum, 2026 could mark a turning point for Bangladesh. Whether it becomes a year of consolidation or missed opportunity will depend largely on the government’s resolve to pursue reforms—particularly in banking—with consistency, transparency and courage.