Prolonged contractionary monetary policy holding back Bangladesh’s economic growth: DCCI

Dhaka Chamber of Commerce & Industry (DCCI) on Monday expressed deep concern over the central bank’s continued contractionary monetary policy, warning that prolonged tightening is holding back Bangladesh’s economic growth without effectively curbing inflation.

As one of the country’s leading private sector bodies, the DCCI said maintaining a tight monetary stance solely to control inflation has failed to deliver the intended results, while inflicting significant damage on productive economic activities, investment and employment generation.

The chamber noted that private sector credit growth has plunged to a 22-year low, falling sharply to 6.1% in December 2025, reflecting acute liquidity constraints, high interest rates and rising borrowing costs.

These factors, it said, are choking entrepreneurship, industrial expansion and job creation.

Private sector investment is also on a declining trend, dropping from 24.18% of GDP in FY2023 to 22.48% in FY2025, reinforcing concerns that prolonged monetary tightening is discouraging long-term investment decisions.

“The Bangladesh economy cannot grow with a tightly clenched monetary fist,” the DCCI observed.

The chamber pointed out that broad money (M2) growth rose from 7% in June 2025 to 9.6% by December 2025, indicating monetary expansion and raising questions about the overall effectiveness and consistency of the current tightening policy.

Export performance has also come under pressure. Over the last six months, exports recorded consecutive negative growth, plunging to minus 14.25% in December 2025, signaling weakening external demand and declining competitiveness amid high financing costs.

DCCI said sustained growth, employment creation and investment revival are not possible under an excessively restrictive monetary regime.

It urged the next elected government to adopt a more pragmatic, growth-supportive policy framework through better coordination between fiscal and monetary policies.

The chamber called for ensuring flexible liquidity availability, reduced borrowing costs and a balanced approach that safeguards macroeconomic stability while supporting economic recovery in the days ahead.