Investment is at a standstill: PRI

Overall investment remained largely flat or slightly declined in the last fiscal year, posing potential headwinds for Bangladesh's future economic growth and job creation, according to the Policy Research Institute (PRI).

The private think tank said today that both public and private investment are stagnant.

Citing International Monetary Fund (IMF) data, it noted that public investment is projected to fall to 6.4 percent of GDP in FY25 before rising to 7 percent in the following fiscal year.

A decline in capital goods imports by 20 to 25 percent and a sharp slowdown in construction sector growth indicate that investment has stalled, the PRI said at its "Monthly Macroeconomic Insights" event in Banani.

Ashikur Rahman, principal economist at the PRI, delivered the keynote presentation.

He said the challenging investment climate has been one of the most serious impediments to economic growth in recent years.

"Without addressing deep-rooted constraints in energy supply, logistics, and political uncertainty, it will be difficult to unlock new investment opportunities," he said.

"In this context, it is neither accurate nor sufficient to singularly attribute slower growth to a tight monetary stance."

Rahman added that unless structural bottlenecks in the real economy are tackled alongside financial policies, Bangladesh cannot meaningfully stimulate investment and sustain growth.

Considering the present economic situation and business environment, business leaders are urging the government to defer LDC graduation, said Anwar-ul Alam Chowdhury Parvez, president of the Bangladesh Chamber of Industries.

"Are we ready yet?" he asked, pointing out that Bangladesh is still heavily dependent on a single export product, although there is potential in sectors like leather and light engineering.

"With one product, how will the economy survive after graduation?"

He said that revenue collection from import tariffs will fall sharply after graduation, while the government has yet to expand the tax net and continues to pressure existing taxpayers.

"Do you know how much local industry will be impacted after LDC graduation just for lifting import tariffs?" he asked, adding that many sectors fear they will be driven out of business.

"After graduation, the whole country will have to comply—whether we are ready or not," he said.