Bangladesh Economy Faces Deepening Crisis Amid Banking Collapse

The Bangladeshi economy currently finds itself at a precarious crossroads, ensnared in a profound crisis defined by soaring inflation, stagnant wages, and a systemic collapse within the banking sector. While official statistics from the interim government offer a glimmer of macroeconomic improvement, the lived reality for millions of low- and middle-income families is one of survival. The chasm between household earnings and the cost of essential commodities has widened to the point where basic necessities—rice, edible oil, and vegetables—alongside rising rents and healthcare costs, are consuming the lion’s share of family budgets.

The statistical narrative presents a complex paradox. Official figures for November 2025 show average inflation cooling to 8.29%, a significant drop from the 11.38% recorded a year prior. However, this disinflation has not translated into relief for the populace because wage growth has simultaneously decelerated to 8.04%. Consequently, real purchasing power continues to erode, leaving wage-based labourers and small-scale entrepreneurs in a state of perpetual financial uncertainty.

Comparative Economic Indicators (2024 vs 2025)

The following table highlights the divergence between macroeconomic recovery and the widening fiscal gap in the banking and investment sectors:

The banking sector remains the economy’s “Achilles’ heel.” Following the political transition, defaulted loans have surged to a staggering 6.44 lakh crore BDT, accounting for over 35% of total outstanding credit. This banking paralysis, coupled with high interest rates and rigorous tax compliance measures, has stifled investment. Shams Mahmud, former President of the Dhaka Chamber of Commerce, warned that capital machinery imports are declining as businesses focus on mere survival rather than expansion. This sentiment is echoed by Dr Mustafizur Rahman of the CPD, who noted that private investment has remained stagnant at roughly 22-23% of GDP, a level insufficient to drive the production and employment required to meet national growth targets.

The social implications of this stagnation are particularly alarming for the youth. Currently, over 20% of those aged 15–29 are classified as “NEET” (Not in Education, Employment, or Training). As the formal job market remains sluggish and direct foreign investment stays below 1% of GDP, the lack of dignified employment opportunities risks fuelling social unrest. Ultimately, while the interim government’s efforts to bolster reserves and restore discipline are evident, the path to a sustainable recovery necessitates deeper structural reforms, enhanced governance, and a concerted effort to restore investor confidence in a volatile geopolitical climate.