Bangladesh risks remaining trapped in weak growth and stubborn inflation unless political stability is matched with deep reforms, higher-quality investment and large-scale job creation, economists said at a discussion in the capital on Wednesday.
The discussion was organised jointly by Voice for Reform and Bangladesh Research Analysis and Information Network at Karwan Bazar, with Fahim Mashroor moderating the session.
The economy stands at a crossroads, with outcomes ranging from recovery to prolonged slowdown, and stability alone will not prevent a slide into a low-growth equilibrium, the speakers said.
Applied economist Jyoti Rahman said Bangladesh must prioritise the quality of investment and employment generation to avoid a prolonged phase of mediocre growth combined with high prices.
With the economy estimated at about $450 billion in 2024, he said Bangladesh would need sustained annual growth of around 8 per cent for a decade to reach a trillion-dollar size, requiring roughly $10 billion in productive private investment each year.
Economists noted that inflation has exceeded both gross domestic product growth and wage growth for more than three years, steadily eroding purchasing power and weakening the financial position of working households.
Former World Bank Dhaka Office lead economist Zahid Hussain said the country is facing a mild but persistent form of stagflation, where growth remains positive but well below potential while inflation stays elevated.
He said political stability is essential but cannot deliver higher growth without macroeconomic and fiscal discipline, alongside fixing structural weaknesses including that in the financial sector.
Under the current institutional framework, Hussain said Bangladesh’s growth potential is capped at around 6.5 per cent, and moving closer to 8 per cent would require far-reaching structural reforms.
Although the banking sector remains burdened by non-performing loans, he said it appears to have passed its weakest phase and is showing early signs of stabilisation.
Planning Commission General Economics Division member Monzur Hossain said growth targets are often politically driven but must reflect economic capacity and private-sector strength.
He said aiming for 8 per cent growth until 2035 is unrealistic without rebuilding economic fundamentals and prioritising inclusive and sustainable development rather than surface-level modernisation.
Investment remains the weakest pillar of the economy, he said, noting that private credit growth is unusually low and current investment is largely limited to ongoing projects, signalling weak investor confidence rather than only high interest rates.
Centre for Policy Dialogue Executive Director Fahmida Khatun said the labour market suffers from a severe mismatch between education and skills, with educated unemployment rising even as employers struggle to find skilled workers.
She said the private sector, which accounts for about 80 per cent of economic activity, has not expanded fast enough, increasing reliance on public-sector jobs and exposing deeper weaknesses in banking, energy, taxation and labour systems.
The tax-to-gross-domestic-product ratio has fallen to around 6.4–6.8 per cent, sharply limiting fiscal space, while reform efforts continue to stall due to entrenched vested interests, she said.
University of Dhaka Development Studies professor Rashed Al Mahmud Titumir said Bangladesh is facing a deep political-economic crisis driven by institutional capture, where power, capital and the state reinforce one another at the expense of productivity and public welfare.
Without institutional reform, he said, changes in leaders or governments will not deliver meaningful transformation, urging political parties to present credible, costed economic programmes that clearly explain how growth, employment and public services will be financed.
He, however, ended his speech with an optimistic note that a politically elected government should revive growth as proven in history.
“Before voting, ask for each party’s clear roadmap to the economic promises,” he suggested.
