Despite government pledges to create jobs, factory closures are leaving thousands of workers unemployed as Bangladesh’s economic recovery struggles to gain momentum.
The Centre for Policy Dialogue (CPD) on Monday said 95 factories shut down between January and August in Gazipur, Savar-Ashulia, Narayanganj and Narsingdi industrial zones, leaving nearly 62,000 workers jobless.
The closures came as the economy showed some signs of stabilisation, but the broader recovery expected by businesses and households remained elusive amid weak investment, slowing industrial activity, fiscal pressure and incomplete reforms.
CPD’s assessment found that the stability achieved so far remains fragile, with structural weaknesses constraining investment, employment and economic expansion.
Presented at a media dialogue titled “The New Government’s First Six Months: An Economic Review” by CPD Distinguished Fellow Debapriya Bhattacharya, the review assessed government performance on restoring growth through investment and employment, containing inflation and strengthening governance.
CPD reviewed 362 government actions across nine areas, including governance, public financial management, industry, banking, energy, transport, agriculture, education, health and social protection. Of the 31 indicators assessed, 12 improved while 19 deteriorated.
Inflation was among the few areas showing improvement.
Headline inflation declined from 9.1 per cent in February to 8.3 per cent in July 2026, while food inflation fell from 9.3 per cent to 7.2 per cent.
However, the decline has brought limited relief as essential prices remain high and real wage growth stays negative.
“Economic stability and recovery are not the same thing,” Bhattacharya said, arguing that lower inflation and stronger reserves alone cannot signal a turnaround without higher investment, production, employment and growth.
CPD said Bangladesh is moving towards a “protracted economic recovery”, requiring action on fragile banks, weak revenue mobilisation, fiscal constraints and subdued investment.
Investment, industrial production and employment emerged as the biggest concerns.
Industrial growth slowed from around 3.5 per cent to near zero, while private sector credit growth remained historically low. Despite restructuring investment agencies, foreign direct investment recovery has remained below expectations.
CPD said employment policy should focus on creating quality jobs rather than only increasing job numbers. Mustafizur Rahman, Distinguished Fellow of CPD, said industrialisation remained essential for generating decent employment.
Fiscal pressure has added another challenge.
The government’s revenue target of nearly Tk7 lakh crore requires around 42 per cent growth in tax collection, despite a shortfall of nearly Tk1 lakh crore in the previous fiscal year.
CPD estimated the revenue gap could widen to Tk1.3 lakh crore–Tk1.4 lakh crore this fiscal year, potentially putting development spending and the Annual Development Programme under pressure.
Energy remains another major constraint on recovery.
Although gas extraction has improved, industrial gas consumption and electricity generation have declined. CPD said Bangladesh lacks a clear medium-term energy strategy, while gas shortages have affected fertiliser production and created risks for agriculture and food security.
“Energy is burning us,” Bhattacharya said.
CPD recommended reducing dependence on imported LNG, accelerating domestic exploration, expanding renewable energy and developing a coordinated energy strategy.
The organisation said recovery is also being constrained by weak fiscal planning, external shocks, political economy challenges, law-and-order concerns and limited institutional capacity.
“Without a clear roadmap for banking and energy, fragmented initiatives will not deliver the desired results,” Bhattacharya said.
CPD also cautioned against treating higher foreign reserves as proof of recovery, saying reserve growth could partly reflect weaker investment and lower production-related imports.
Despite concerns, CPD highlighted positive measures, including tariff benefits for low-income users, coastal gas exploration tenders, healthcare equipment tax reductions and metro rail fare discounts for senior citizens.
It also welcomed expansion of bonded warehouse facilities beyond the garment sector, bilateral trade initiatives, farmers’ loan waivers up to Tk10,000 and tax reductions on dialysis filters, heart stents and cancer treatment-related products.
However, it raised concerns over alleged political influence and irregularities in the distribution of Farmers Card and Family Card benefits.
CPD said the government needs an integrated reform programme covering banking, revenue administration, energy security, public expenditure, ADP effectiveness, logistics and digitalisation.
It warned that delaying reforms could push Bangladesh back to the “old playbook” of opacity, vested interests and weak accountability in economic management.
