STAR BUSINESS REPORT

Despite achieving healthy economic growth over the past decade, Bangladesh’s economy is now showing signs of strain due to persistent inflation and slowing private investment, exposing underlying weaknesses, experts said at an event yesterday.

“Bangladesh faced the Middle East crisis with several existing vulnerabilities, including persistent inflation, weak investment growth and financial sector stress,” said Dhruv Sharma, senior economist at the World Bank.

He made the remark while presenting a keynote speech at the seminar on “Bangladesh Development Update: Special Focus - A Business Environment that Delivers Jobs” jointly organised by Policy Research Institute of Bangladesh (PRI) and the World Bank at the PRI auditorium.

Although Bangladesh Bank has succeeded in bringing inflation down from around 12.5 percent to nearly 9 percent, tighter monetary policy alone cannot fully address the inflationary pressures, which are being fuelled less by excess demand and more by inefficiencies in supply chains, distribution systems and market management, according to Sharma.

World Bank’s Bangladesh-Poverty and Equity Assessment 2025 showed that another 1.4 million people slipped below the poverty line, raising the national poverty rate to 21.4 percent. Sluggish job creation and external shocks, particularly the Middle East conflict, have added to the pressure on households.

He cautioned that prolonged tight monetary conditions are weighing on investment and employment as businesses continue to struggle with high borrowing costs.

Unless wider reforms are made to improve market governance, logistics and the investment climate, hiking interest rates risks further slowing economic growth while failing to substantially ease inflationary pressure, he said.