Bangladesh’s economy is currently under the pressure of both positive and negative indicators, but the overall picture shows the economy is struggling, former World Bank Lead Economist Dr Zahid Hussain has said. 

Highlighting the concerning indicators, he pointed to prolonged high inflation, declining real wages, stagnant employment, sluggish exports and a downturn in investment. “The situation could have been worse — but it wasn’t. At the same time, it could have been better — but that didn’t happen either,” he noted.

He made the remarks on Monday at a seminar organised by the Planning Commission at the NEC Conference Room in Sher-e-Bangla Nagar to unveil the report ‘State of the Bangladesh Economy 2025 and Progress Report on the Sustainable Development Goals 2025’.

The event was chaired by Dr Manzur Hossain, Member (Secretary) of the General Economics Division (GED). The keynote paper was presented by Additional Secretary Dr Munira Begum.

Among the discussants were CPD Distinguished Fellow Dr Mostafizur Rahman, former World Bank Lead Economist Dr Zahid Hossain and Dhaka University Professor Mahbubullah. Special guests included Planning Secretary S M Shakil Akhter, NBR Chairman M Abdur Rahman Khan, Finance Division Secretary Dr Khairuzzaman Mozumder, SDG Chief Coordinator Lamia Morshed, Chief Adviser’s Press Secretary Mohammad Shafiqul Alam, and Bangladesh Bank Governor Dr Ahsan H Mansur. Dr Anisuzzaman Chowdhury, Special Assistant at the Ministry of Finance, attended as Chief Guest.

Dr Zahid Hussain said that despite some positive developments, the negative indicators remain dominant.

Among the positives, he listed record remittance inflows, reduced capital flight, improved revenue mobilisation and a reasonably stable power supply. He added that while natural shocks had shaken the economy, they did not cause catastrophic damage.

However, the negatives — prolonged high inflation, declining real wages, stagnation in employment, sluggish exports and reduced investment — outweigh the gains. Citing the World Bank’s poverty assessment, he said the number of poor and newly poor households has increased.

He outlined three reasons why the situation has not deteriorated further.

First, Bangladesh’s social resilience remains strong — even when the state machinery was nearly paralysed between 5 and 8 August 2024, the economy did not collapse.

Second, the interim government’s political management has created a relatively controlled environment; despite personal attacks, the comparatively restrained political rhetoric suggests a cultural shift.

Third, the “pause” in past “self-destructive behaviour” in macroeconomic management is a positive sign that must continue.

He emphasised that reforms cannot be achieved by goodwill alone. “Without political stamina, reforms stall halfway.”

Speaking at the seminar, Special Assistant Dr Anisuzzaman Chowdhury said interest rates may need to be increased further to bring inflation down to 5 percent, as the large informal sector requires stricter policy enforcement. He noted that while Bangladesh Bank deserves credit for reducing inflationary pressures, maintaining a high interest rate environment remains necessary for now.

Press Secretary Shafiqul Alam warned that without improving the efficiency of Chattogram Port, a “manufacturing revolution” would not be possible. He also criticised sections of the media for giving undue prominence to a few “tiny groups,” thereby distorting public discourse.

NBR Chairman Abdur Rahman Khan announced that the two new bodies — Revenue Policy and Revenue Administration — formed after dissolving the NBR, would begin operations by December. He said policy formulation would now be more independent, ensuring better revenue generation and reducing inequality.

Bangladesh Bank Governor Dr Ahsan H Mansur said the economy was facing multiple pressures — high inflation, a dollar shortage, falling reserves, a current account deficit and weak banking governance — when he took office. He said stabilising the exchange rate involved rapid engagement with domestic and foreign banks, which ensured the normalisation of trade financing. The balance of payments is now positive, and reserves have risen from USD 17 billion to USD 27 billion.

However, inflation remains a major challenge. He said money printing and the sale of foreign currency had been halted to shift towards a more rule-based market.

The Governor added that strong steps had been taken to restore governance in the financial sector, including restructuring the boards of 40 banks, disclosing the true non-performing loan (NPL) ratio of 35.6 percent, suspending bonuses at loss-making banks and banning dividends until capital shortfalls are addressed.