FROM PAGE 12

The survey covered agriculture, manufacturing and services, drawing responses from 762 businesses, including 330 manufacturing firms and 432 service-sector enterprises, while agricultural data was sourced from government agencies.

The study focused on Dhaka and analysed data collected during the first and second quarters of fiscal 2025-26.

Businesses identified weak consumer demand as one of their biggest concerns. Small and medium-sized enterprises appeared to be under the greatest strain, as they struggled to absorb higher costs without losing customers.

Many firms also reported continued unofficial payments and demand for speed money to obtain licences, permits and regulatory approvals.

As per the EPI, agriculture performed well in the first two quarters of fiscal 2025-26, but the manufacturing sector suffered due to energy shortages, expensive imports and high financing costs.

Performance of the services sector, which includes wholesale and retail trade, was moderate.

Bangladesh’s economy is facing a difficult period marked by high inflation, pressure on foreign exchange reserves, sluggish investment, energy uncertainty, rising manufacturing costs and declining employment opportunities, said DCCI President Taskeen Ahmed.

Together, these challenges are intensifying pressure on the broader macroeconomy.

Conventional macroeconomic indicators often fail to capture real-time economic conditions and short-term changes, limiting the scope for timely policy responses.

In that context, he described the EPI as a timely initiative that could help policymakers, entrepreneurs and researchers make decisions based on ground realities.

The index would gain greater credibility and effectiveness if expanded beyond Dhaka to capture nationwide business conditions, said Zaidi Sattar, chairman of the Policy Research Institute of Bangladesh.

Such an indicator could help entrepreneurs better assess the economic climate and make informed decisions, he added.

Nesar Ahmed, an international trade expert and former additional secretary involved with the Support to Sustainable Graduation Project (SSGP), warned that Bangladesh’s graduation from the least developed country (LDC) category could jeopardise duty-free access to European markets.

The CMSME sector could be particularly vulnerable, he said, while stressing the need to reduce the cost of doing business while ensuring supportive policies.

The economy is currently grappling with three major challenges: high inflation, weak investment and a fragile banking system, said Shibir Bicitro Barua, an additional secretary at the commerce ministry.

He also emphasised the need for future studies to incorporate broader macroeconomic indicators such as remittance inflows, foreign direct investment, domestic investment, inflation and unemployment to better reflect the overall economic situation.

Miah Rahman Ali, senior private sector specialist at the International Finance Corporation, urged future studies to focus more on risk reduction, value addition and preparing industries for global shocks, including wars, supply chain disruptions and environmental pressures.

He cautioned that Bangladesh’s heavy dependence on garment exports and remittances leaves the wider economy vulnerable to any downturn in the apparel sector.

He also called for stronger policy support to help industries comply with increasingly stringent environmental standards in Europe and recommended alternative financing tools such as movable asset-based collateral and embedded finance backed by appropriate legal frameworks.

Both public and private sector spending had outpaced income growth in recent years, while sluggish investment expansion has slowed overall economic activity, said Mizanur Rahman, a professor at the University of Dhaka’s department of accounting.

Bangladesh should rely more on the capital market for long-term financing instead of depending predominantly on banks, said Syed Muntasir Mamun, director general of the foreign ministry’s international trade, investment and technology wing.

The country’s capital market remains weak and there is still limited readiness to deepen reliance on it, he added.

Sector-specific information could play an important role in policymaking, institutional reform and designing incentives, said Md Ariful Hoque, former director general of the Bangladesh Investment Development Authority.

Greater digitalisation of public services would significantly reduce hassles faced by the private sector, he added.

There is no alternative to foreign direct investment for accelerating economic growth, said Akhand Mohammad Akhtar Hossain, chief economist of the Bangladesh Bank, adding that Bangladesh trails significantly in this area.