A Comprehensive Look at Bangladesh’s Macroeconomic Challenges

In early 2026, the country reached a decisive turning point in its economic and political trajectory as the economy was left burdened and vulnerable by the national debt, which rose from 2.77 trillion BDT in 2009 to over 18.35 trillion BDT by 2024. The previous 15 years under Sheikh Hasina had been characterized by ambitious infrastructure projects and economic efforts, but at a heavy cost. Even while inflation and financial instability subtly tore at people, businesses, and institutions alike, mishandled borrowing, pervasive corruption, and the falsification of critical economic metrics had produced a fake narrative of progress and prosperity.

This problems were passed down to the short-lived Interim Government, which acted quickly to stabilize the situation. They were able to control inflation and regain some trust in the financial system by using a combination of fiscal measures, interest rate changes, and stricter monetary policy. However, the economic damage was severe. The country’s resilience was constrained by structural vulnerabilities in banking, energy, and industry, high debt levels, and a halt in export diversification.

Public expectations have become stronger as the BNP establishes its governance after a 20-year hiatus. The public anticipates strong leadership, a resurgence of the economy, and noticeable gains in living standards. However, striking a balance between immediate recovery efforts and long-term reforms is a formidable task for the new administration. Every policy decision will be closely examined and scrutinized due to the residual effects of previous poor management, and the pressure to bring about substantial, noticeable change will characterize the early years of this new chapter in Bangladesh’s political and economic history.

Bangladesh’s Stagflation: A Multi-Threaded Strain

The depreciation of the taka significantly escalated the domestic cost of fuel, industrial raw materials, essential food items, and capital goods by increasing the expense of imports. This trend persisted even after the Headline CPI (Consumer Price Index) showed signs of stabilizing, indicating that inflation was driven by a structural increase in production costs (cost-push) rather than an excess of consumer demand.

Due to the country’s high dependence on imported necessities, currency pass-through (the transmission of exchange rate fluctuations to retail prices) continues to be a primary catalyst for rising costs. Following a 30-month period of sustained price growth, a brief respite ended in September 2025 as inflation surged once more. This resurgence was fundamentally driven by the delayed impact of currency devaluation, elevated global import prices, excessive liquidity within the financial system, and persistent gaps in domestic production

By tightening monetary policy, providing fiscal support through lower or eliminated import levies, and bolstering foreign exchange reserves to enable Letters of Credit (LCs) for necessities, the Interim Government tried to contain inflation. Their efforts gradually drove inflation below 9%, still falling short of its target of 7%. While the Bangladesh Bank maintained a high policy rate and stabilized the taka around Tk 122 per USD, a slight currency appreciation by not printing more notes could have further reduced import costs and curbed imported inflation.

The government’s plans to control prices failed to achieve all of its goals for two primary reasons: First, there was reliance on flawed data, making it difficult to accurately forecast the country’s needs for rice, lentils, cooking oil, and other essential foods, with evidence suggesting that both monetary and fiscal information may also have been manipulated. Secondly, powerful groups (syndicates) controlled the markets and ignored the government’s directives, making it rather difficult to stop prices from rising. This had complications related to the wider issue of law and order that plagued the rule of the interim government. Without reforms in supply-side management and market supervision, achieving long-term price stability remained difficult as it does currently.

The Business Standard highlighted –

The Consumer Price Inflation Rates In FY25 (Rural and Urban)

Category	National Inflation (%)	Rural (%)	Urban (%)
Alcoholic Beverages, Tobacco & Narcotics	19.64	19.97	18.87
Clothing & Footwear	11.27	9.64	14.27
Restaurants & Hotels	10.73	10.03	12.16
Communication	9.03	8.2	10.28
Housing, Water, Electricity, Gas, and Other Fuels	8.89	10.36	7.09
Furnishings, Household Equipment, and Routine House Maintenance	8.28	8.16	8.51

The Overall Inflation Trend (2025 – Jan 2026)

Period	Point-to‑Point Inflation (%)	Food Inflation (%)	Non‑Food Inflation (%)
October 2025	8.17%	–	–
November 2025	8.29%	7.36%	9.08%
December 2025	8.49%	7.71%	9.13%
January 2026	8.58%	8.29%	8.81%

The economic landscape of Bangladesh as of early 2026 presents a stark picture of stagflation, where high inflation coexists with stagnant growth and rising unemployment. Households are enduring significant real income erosion as inflation (8.58%) outpaces wage growth (8.04%), effectively serving as a “hidden tax” that hits low income households hardest due to rising costs for essentials such as housing and energy.

Despite immense pressure to stimulate the economy, Bangladesh Bank has maintained a strictly contractionary stance to preserve price stability, keeping the interest rate at 10%, the Standing Lending Facility (SLF) at 11.5%, and slightly adjusting the Standing Deposit Facility (SDF) to 7.5% in February 2026. This hawkish approach, while managing to bring inflation down from its 2024 peak of 11.38%, has seen private sector credit growth plummet to a two-decade low of 6.29%, leaving businesses starved of fresh financing. The banking sector remains a critical bottleneck, with non-performing loans (NPLs) surging to an alarming 35.73% (Tk 6.44 lakh crore or 61.3 billion USD) by late 2025, the highest ratio in Asia. This systemic fragility, combined with a precarious GDP growth rate that dipped to 2.58% in Q1 FY26 before a modest recovery, has made banks extremely risk-averse, favoring safe government securities over private lending.

Externally, risks persist with a current account deficit of 0.70 billion USD and constant pressure on foreign exchange reserves. While model forecasts suggest inflation could finally drop below 8% by mid-2026 potentially allowing for a 25–50 basis point rate cut upside risks like global fuel prices and supply-side bottlenecks remain high.

The social repercussions are increasingly severe as graduate unemployment has climbed to 13.54%, and the garment sector has been devastated, with 260 plant closures leading to the loss of 220,000 jobs over the last 18 months. Meanwhile, the agricultural sector continues to underperform, employing 40% of the workforce but contributing only 11.2% to the GDP. Further slowdowns of this critical sector risk inducing food security vulnerabilities. As regional rivals such as India and Sri Lanka successfully stabilize their inflation near 2-4%, Bangladesh remains a regional outlier, struggling to dismantle structural barriers such as market extortion, fiscal deficits, and high energy costs that continue to threaten long-term recovery.

Foreign Exchange Reserves and Financial Volatility 

Bangladesh entered a severe macroeconomic crisis defined by a rapid depletion of foreign exchange reserves and a dramatic exchange rate shock that significantly devalued the Taka. This instability was compounded by systemic plunder within the banking sector and widespread money laundering, eventually culminating in the uprising of July-August 2024. By late 2025, foreign exchange reserves were slowly rebuilt, and the current account deficit was narrowed to under 1% of GDP. While these actions have successfully stabilized the exchange rate through increased flexibility and improved the balance of payments, the underlying macroeconomic foundation remains notably fragile.

The banking system continues to represent the most significant risk to long-term stability due to unprecedented damage incurred over the last four years. Non-performing loans (NPLs) surged across the industry, with some distressed Islamic banks reporting extremely high NPL ratios, while the system-wide average rose sharply. This crisis left several big banks technically insolvent. To stop the whole banking system from crashing, the government had to force these banks to merge or reorganize. One major example was Islami Bank Bangladesh. It ran out of cash and had serious leadership problems because, for years, it gave out loans to people based on political connections rather than good business potential. To deal with the problem, the government stepped in, fired the old bosses, appointed a new board of directors, and put in more money to make the bank safe again to restore trust.

Another major case was the rescue of Padma Bank. The government had to step in and help it merge with a stronger partner because it was running out of money and too many people were not paying back their loans. Padma Bank was originally called Farmers Bank, but it almost collapsed because of massive corruption, fake loans, and people rushing to take their deposits out. To save it, the government forced state-owned banks to inject fresh cash and changed how the bank was run to stop it from failing completely.

Consequently, economic growth has decelerated sharply, moving away from the robust 7–8% expansion seen in the pre-COVID era and immediate rebound years. For FY2025, growth plummeted due to falling private investment, import compression, and chronic under-implementation of the Annual Development Programme (ADP). Credit growth has stagnated, reflecting a lack of confidence among both lenders and borrowers in a high-interest-rate environment. Economic experts from the IMF and World Bank suggest that Bangladesh is entering a period of modest recovery in 2026, though growth remains below its historical highs. While GDP is projected to grow by approximately 4.9%, this rebound is being driven by a gradual decline in inflation and a stabilization of the country’s foreign exchange reserves, which currently stand near 32 billion USD.

This cautious optimism is supported by record-breaking remittance inflows reaching over $3 billion by January 2026 alone and a steady performance in the garment sector. However, international lenders warn that this “rebound” is fragile and heavily dependent on the government’s ability to maintain political stability and manage the transition following the recent February elections.

The most significant barrier to a sustained recovery remains the banking sector, which is currently grappling with a historic crisis of bad debt. As of early 2026, non-performing loans (NPLs) have surged to approximately Tk 6.44 lakh crore (52.8 billion USD), representing over 35% of all disbursed credit. This toxic debt has effectively frozen the financial system, as banks prioritize their own survival over lending to the private sector. The situation is particularly severe among large-scale industrial loans, where nearly half of all credit is in default, creating a clogged process that prevents businesses from accessing the capital they need to expand and create jobs.

To prevent a total systemic collapse, the government has launched aggressive structural reforms, including the landmark Bank Resolution Ordinance of 2025. This new directive allows the central bank to bypass lengthy court delays and move quickly to merge or shut down failing institutions, a power already used to consolidate five weak Islamic banks into the new Shommilito Islami Bank PLC. Furthermore, the government is establishing a National Asset Management Company (AMC) to act as a bad bank. This entity will buy up toxic loans to clean up bank balance sheets, allowing healthier institutions to resume normal lending while specialized teams focus on recovering the lost funds from major defaulters.

On the fiscal front, the budget deficit appears moderate, but this stability masks structural weaknesses. Tax revenue remains stagnant at a mere 6–8% of GDP, while ADP implementation has fallen to a historic low. Consequently, while public debt has risen and interest payments are increasing sharply, the deficit only looks controlled because development spending has been drastically cut rather than because revenue collection has improved. Without comprehensive tax reform to broaden the base, the government’s fiscal space will remain dangerously narrow, limiting its ability to fund essential public services or infrastructure.

As part of the strategy to stabilize the economy, the Interim Government had deliberately reduced imports across several critical sectors despite slashing import levies. This strategy focused heavily on cutting back capital machinery, which includes the large-scale equipment needed for high value industries. By making it harder for banks to provide foreign currency for textile machinery, power plant turbines, and construction equipment like cranes and excavators, the government successfully kept its dollar reserves from disappearing. However, this came at a major cost. Private companies had to put their expansion plans on hold, and many national infrastructure projects faced significant delays because the necessary equipment could not be brought into the country.

The energy sector was also under tight control, as the government had to balance the need for electricity with the need to save money. While the country could not completely stop buying essential oil, coal, and gas, it optimized these purchases by delaying orders and renegotiating deals to ease the pressure on its reserves. This careful management prevented the country’s savings from running out, but the trade-off was felt by the public through periodic power shortages and rising domestic prices for fuel and electricity.

Stricter limits were placed on luxury and non-essential items to further protect the economy. Imports of high-end cars, expensive smartphones, branded fashion, and processed foods were significantly reduced through higher taxes and administrative hurdles. Even basic industrial raw materials, such as steel and plastic, were restricted unless they were directly needed for export industries like garments. While these collective measures successfully turned a trade deficit into a surplus and stabilized the country’s balance of payments, analysts warn that continuing to block the import of machinery and raw materials could eventually cripple the country’s ability to produce goods and grow in the long term.

The International Monetary Fund (IMF) Executive Board approved the combined third and fourth reviews of Bangladesh’s multi-billion dollar loan program on June 24, 2025. This approval unlocked immediate access to approximately 1.33 billion USD in funding under the Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility (RSF) programs.

The IMF also approved an augmentation of 567.2 million SDRs which refers to an amount denominated in Special Drawing Rights, an international reserve asset created by the IMF that acts as a potential claim on a basket of five major world currencies to help countries boost their financial reserves. A six-month extension of this program was requested to navigate the fallout from global commodity price surges and reserve pressures.

Despite the implementation of required reforms, the economic landscape as of February 2026 remains challenging, with inflation slightly increasing due to rising food prices. While the IMF noted that program performance has been broadly satisfactory, it warned of persistent downside risks, including banking sector vulnerabilities and the need for more aggressive tax revenue mobilization. The program’s success continues to hinge on critical structural reforms, such as maintaining exchange rate flexibility and addressing the high levels of non-performing loans.

The IMF has officially commended Bangladesh Bank’s recent accumulation of foreign exchange reserves as a major success of the loan program. The rebound was fueled by robust growth in export earnings and remittances, alongside strategic currency purchases by the central bank. Since transitioning from a crawling peg to a more flexible exchange rate system in May 2025, the currency has largely stabilized despite the failure to reach deflation goals, and the central bank has proactively purchased billions of dollars to prevent further depreciation. These strengthened reserves have fortified public trust in the national currency and are expected to serve as a critical shock absorber against any potential economic pressures from 2026 onwards.

The rapid merger of troubled banks after the 2024 uprising still failed to adequately stabilize the banking sector or revive credit growth. Poor planning and limited due diligence led to operational conflicts and weak integration, while problematic executives remained in place. Structural issues such as poor governance, weak risk management, and fraud control were not addressed, leaving banks cautious and private sector credit growth stagnant.

The Bangladesh Investment Development Authority (BIDA) on the other hand has found it difficult to turn successful meetings with foreign leaders into actual deals. A major disappointment was the failed partnership with the UAE-based company DP World, which was intended to modernize Chittagong Port and other shipping hubs. This project was expected to make port operations much faster and more efficient to bring in more international transit business, and connect Bangladesh better to global trade routes. Because this deal fell through, international investors worry that the country’s intractable problems still exist, regardless of the Dhaka’s promises to fix things. It is still important to keep in mind that DP World’s own problems in relation to former CEO Ahmed bin Sulayem’s relations with disgraced financier and sex offender Jeffrey Epstein has also complicated matters.

Another project with an uncertain timeline is the “Defence Economic Zone (DEZ)” in Mirsarai, Chittagong which was intended to be a high-tech industrial park for foreign military and technology manufacturers. Despite a lot of publicity, the project stopped moving forward due to delays in land accusation, regulatory complications, and fears that government policies might change again soon.

These hurdles are part of a larger macro-problem with the country’s business environment. Investors are still frustrated by unpredictable regulations, informal red tape, the need for too many different approvals, and rules that are not applied fairly. Additionally, the rising cost of electricity for factories and frequent power cuts have made production more expensive, while the unstable value of the taka has made it hard for companies to send their profits home or plan for imports. Because the banking sector has not been fully fixed, it is also difficult for businesses to get loans. All these issues together have stopped major government announcements from turning into real foreign investment or building trust in the private sector.

Economic Vulnerabilities and Reform Priorities Following LDC Graduation

On November 24, 2026, Bangladesh is scheduled to reach a historic economic milestone by officially graduating from Least Developed Country (LDC) status, a transition that signals national progress to global investors but also introduces a daunting economic cliff. While the country currently enjoys duty-free access to the European Union under the Everything But Arms (EBA) scheme, graduation will eventually terminate these benefits.

Although a three-year WTO grace period extends this access until 2029, the country must secure GSP+ status to avoid a massive trade shock. While some entrepreneurs have advocated for delaying graduation pointing to precedents set by nations like Nepal such a move is politically complex, requiring UN approval that competitors might block, and could undermine the prestige of becoming a stable middle-income economy.

The transition to GSP+ is fraught with technical difficulty, as it requires strict compliance with 32 international conventions on labor and human rights while facing a success trap. Specifically, the EU’s Automatic Safeguard Mechanism (Article 29) lowers the threshold for duty-free access to 37%; because Bangladesh already provides over 55% of GSP clothing imports to the EU, it could face a 12% tariff immediately upon entering the program.

Furthermore, the shift from a one-stage to a two-stage Rule of Origin means that local manufacturers must produce both the yarn and the fabric domestically to qualify for zero duties, a requirement that many woven garment exporters currently cannot meet.The economic implications of failing to navigate these hurdles are severe, with economists estimating a potential annual export revenue loss of $8 billion, or roughly 14% of total exports. This loss would primarily hit the apparel sector, which accounts for over 80% of earnings.

While the pharmaceutical sector faces an even more immediate TRIPS in 2026, as it will lose the patent waiver that currently keeps local medicine prices low. TRIPS is an international agreement that sets minimum standards for intellectual property protection, including patents, copyrights, and trademark shock. After graduation, if a new medicine is patented abroad, local companies will need to pay a 4% royalty to patent holders. Adapting to such standards will be a tall order for the current state of the pharmaceutical industry.

Mohammad Abdur Razzaque, chairman of RAPID (Research and Policy Integration for Development) recommended that to strengthen the pharmaceutical sector and protect public health affordability, policymakers should formulate a competitive national drug policy that enhances efficiency, transparency, and global competitiveness. At the same time, increasing public investment in healthcare is essential to ensure broader access to affordable medicines and improved health services. As Bangladesh produces pharmaceuticals locally, it is important to safeguard the industry to ensure affordable access to medicines and protect domestic innovation.

The long-delayed Active Pharmaceutical Ingredients (API) Park in Munshiganj must be made operational without further delay to boost domestic raw material production and reduce reliance on costly imports. Additionally, introducing micro health insurance schemes could help reduce the financial burden of medical expenses on low-income populations and improve healthcare accessibility for the poor.

Without preferential access, Bangladesh risks an uneven playing field against rivals like Vietnam, which will enjoy 0% duties through its own Free Trade Agreement by 2029. This creates a middle-income trap where the country’s high-cost structure and loss of subsidies could stifle growth and strain foreign exchange reserves.

To avoid this cliff, the government is pursuing Diplomatic Engineering to lobby the EU for higher safeguard thresholds and an extension of simplified Rules of Origin. Domestically, the focus has shifted toward a Smooth Transition Strategy that prioritizes five high-efficiency Special Economic Zones (SEZs) to attract foreign investment fleeing China often called the Trump Factor and digitizing trade approvals through the National Single Window.

The best case scenerio for the BNP is to either extend the LDC graduation timeline or cancel it entirely to protect the country’s economic and industrial interests.

Bangladesh’s Energy Crisis

Bangladesh is currently facing a severe energy crisis, driven by a structural shortage of US dollars, unreliable domestic generation, and an overreliance on imported fossil fuels. Domestic energy production is constrained despite an installed capacity of nearly 30,000 MW, which should theoretically cover peak demand of 16,000–17,000 MW. In practice, many plants fail to generate electricity at full capacity due to fuel shortages, maintenance delays, and technical inefficiencies. Natural gas, historically the backbone of Bangladesh’s power mix, accounted for only 42.6% of generation in 2025, as local wells are depleting and LNG imports are increasingly difficult and costly.

The Rooppur Nuclear Power Plant, a key domestic project with a capacity of 2,400 MW, is not yet operational. Critical safety tests, regulatory approvals, and final technical setups remain incomplete. The transmission lines connecting Rooppur to the national grid were finished in mid-2025, but Unit‑1 is now expected to begin operations only in late 2026, with Unit‑2 following in 2027. Until then, Bangladesh cannot rely on this major source to ease its energy shortfall. Such a crisis affects all sectors of the economy. SMEs and the apparel industry, which account for 80% of exports, face rising production costs as diesel generators replace unreliable grid power. Agriculture suffers from higher irrigation expenses, industrial operations are sporadic, and around 4 million textile workers have been laid off. Blackouts exacerbate inflation and undermine economic stability.

Several domestic power plants have failed to deliver reliable electricity despite being operational or completed. For example:

The Payra Coal Power Plant (1,320 MW) often runs well below capacity due to expensive imported coal and foreign currency shortages, sometimes producing only a few hundred megawatts. Rampal Power Station (1,320 MW) faces recurring fuel procurement issues and environmental constraints, limiting its ability to provide consistent base-load power. Other plants, such as Summit Meghnaghat, SS Power, Reliance–JERA, and Rupsha, are underutilized due to contract rigidities, fuel shortages, and clustering inefficiencies.

Renewable energy has limited impact, with solar and wind contributing only 1–2 GW of installed capacity. While rooftop solar initiatives and corporate power purchase agreements (CPPAs) could reduce costs and emissions, high import tariffs (28.73%) and financing constraints slow adoption. Oil-fired power remains prohibitively expensive at Tk 25/kWh, nearly three times the cost of solar and double the average grid price (Tk 12.10). The sector is trapped in a high-cost energy system. Although there is about 60% more installed capacity than needed, most plants cannot operate efficiently. Take-or-pay clauses, foreign currency indexing, and capacity charges of up to 1.5 billion USD annually force the government to pay for idle infrastructure, making electricity in Bangladesh costlier than in neighboring India.

Given domestic generation constraints, Bangladesh relies heavily on imported electricity, particularly from the 1,600 MW Godda coal-fired plant, owned by the Adani Group in Jharkhand, India. Under a 25-year agreement signed in 2017, Bangladesh committed to buying nearly all output from the plant. The Godda facility contributes around 10% of Bangladesh’s total power supply through dedicated transmission lines, providing a more stable and cost-effective alternative to expensive oil-fired generation. Even after past payment disputes, including a $437 million one-off settlement in June 2025 and monthly payments of $90–100 million, the Godda plant continues to supply power. Bangladesh ensures steady operations by issuing sovereign guarantees and Letters of Credit, which reassure Adani’s lenders and secure ongoing energy delivery despite ongoing debates over pricing and contract fairness.

A government-appointed National Review Committee, chaired by retired Justice Moinul Islam Chowdhury, examined power sector contracts under the previous administration. The committee found that Bangladesh overpaid Adani by $400–500 million annually, potentially leading to total losses of $10 billion over 25 years. It recommended canceling or renegotiating the Adani agreement, revisiting other high-cost contracts, mandating competitive bidding for future projects, and establishing an independent energy regulator to improve transparency and fiscal sustainability.

Underlying these challenges is a persistent foreign exchange shortage. Bangladesh faces pressure to pay $3.5 billion in external fuel and power bills, delaying payments to LNG suppliers, coal exporters, and electricity importers. These constraints reduce domestic generation, keep plants idle, and increase the country’s dependence on reliable imports like the Godda plant, highlighting how energy security is closely tied to access to dollars and global fuel markets.

Rising power costs and energy shortages have severely affected productivity in Bangladesh. In the textile and apparel sector, which drives 80% of exports, factories are operating at only 40–50% capacity, and 4 million workers have been laid off. Industrial production has also suffered, with steel output falling 25–30% and ceramics dropping 50%. The cost of diesel, used to run backup generators, has reached Tk 104–108 per litre, while electricity costs have increased by roughly 40%.

Daily load shedding of 6–8 hours in industrial zones has left machinery idle, reducing manufacturing productivity and delaying order fulfillment, making national productivity lower than that of Vietnam and China. Overall, energy-intensive sectors are experiencing production losses ranging from 20–50%, causing many firms to lose money for the first time in decades.

Bangladesh’s gradual move to renewable energy is at odds with its reliance on coal fired imports (Adani, Payra, and Rupsha). Although coal is still less expensive than oil fired production, it goes against energy sustainability and climate goals. Corporate power purchase agreements (CPPAs), rooftop solar systems, and large scale solar projects might all help minimize emissions, expenses, and the usage of fossil fuels. Businesses like Robi and Pran-RFL are investigating CPPAs as a green energy source. A 1 MW rooftop plant may save Tk 22.4 million (0.18 million USD) a year, however adoption of rooftop solar is hindered by 28.73% import charges and financing constraints. Temporary duty waivers and streamlined low-cost financing could promote acceptance.

The overall picture is further complicated by geopolitical considerations. Bangladesh must follow a tight rope as it is hounded by large and powerful global players. Recent agreements with the United States are leading observers to fear an alignment that may bring Bangladesh too closely within the orbit of Washington. Other players, such as Russia or even India may react adversely and in ways that as of yet, remain unpredictable. It takes solid statesmen to be wary of such events, and dealing with the issue posed by the Adani Group is the first step towards grounded strategic security.

KEY TAKEAWAYS

1. Bangladesh’s national debt increased dramatically from 2.77 trillion BDT in 2009 to over 18.35 trillion BDT by 2024, leaving the economy fragile and vulnerable.

2. The country is experiencing stagflation, with high inflation of 8.58% in January 2026, low GDP growth of around 2.58% in Q1 FY26, and rising unemployment, particularly in the textile and agricultural sectors.

3. The depreciation of the taka significantly increased the cost of imported fuel, raw materials, and essential goods, creating structural cost-push inflation rather than demand-driven price increases.

4. Flawed government data on staple foods, as well as manipulated monetary and fiscal statistics, combined with the influence of market syndicates, prevented effective control of rising prices.

5. The banking sector is under severe strain, with non-performing loans reaching 35.73% (Tk 6.44 lakh crore), which has frozen private sector credit growth and created systemic financial risks.

6. Bangladesh faces a severe energy crisis, with unreliable domestic generation, depleting natural gas resources, and delayed projects like the Rooppur Nuclear Power Plant contributing to frequent blackouts.

7. The country relies heavily on imported electricity, particularly from Adani’s Godda plant, and on imported fuel, making foreign exchange shortages a major vulnerability.

8. Rising energy costs and power outages have significantly reduced industrial productivity, with energy-intensive sectors experiencing production losses of 20–50% and resulting in the layoff of 4 million textile workers.

9. Renewable energy initiatives, such as rooftop solar and corporate power purchase agreements, could help reduce costs and emissions, but high import tariffs (28.73%) and financing constraints have slowed their adoption.

10. Bangladesh must carefully balance its geopolitical relationships, as trade deals with the US, reliance on Chinese imports, and Russian energy cooperation all influence costs, supply stability, and overall economic security.

11. Bangladesh’s LDC graduation in 2026 will end EU EBA benefits, and without GSP+ status by 2029, tariffs of up to 12% could lead to an estimated $8 billion annual export loss, heavily impacting the apparel sector.

12. The loss of the TRIPS waiver will require a 4% royalty on newly patented medicines, raising prices slightly. To avoid a middle-income trap, Bangladesh must pursue structural reforms, including strengthening trade competitiveness, healthcare investment, and industrial capacity.

Verification Note: Information is collected and cross-verified through multiple channels, including official information desks, credible social media sources, and established news outlets. Each source is assessed for reliability, with unsubstantiated or irrelevant claims excluded. The validated information is then systematically analyzed to derive conclusions.