After facing a challenging year due to economic pressures, high borrowing expenses, and prolonged political uncertainties, Bangladesh is cautiously optimistic as it enters 2026 in hopes that a post-election political reset could kickstart the investment environment.
Although certain indicators showed signs of stabilization towards the end of the previous year, such as the exchange rate and foreign reserves, investor confidence remained fragile, with lingering effects expected to persist into 2026.
Economists and industry leaders emphasize that the country’s recovery will heavily rely on the new government’s ability to outline a clear and believable economic strategy.
Throughout 2025, private investments lost momentum, as indicated by central bank figures revealing a 6.58 percent credit growth in sectors in November, down from 7.66 percent the previous year.
Fresh foreign investments in company shares and ownership shares, known as foreign equity inflows, declined by nearly 17 percent year-on-year to $554.77 million in fiscal year 2024-25 (FY25).
However, total net foreign investments increased to $1.69 billion from $1.42 billion, mainly driven by reinvested earnings rather than new capital inflows.
M Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh, emphasized that without a credible long-term plan, investment activities will likely remain subdued in 2026. He highlighted 2025 as a missed opportunity, noting the absence of targeted policies to support SMEs, exports, and job creation despite some progress in exchange rate stability and banking oversight.
Reaz underscored the importance of enhanced government-business community engagement to boost confidence and address investment facilitation and policy challenges.
Experts suggest that the reduction in political uncertainties post-election could prompt delayed investment decisions this year, provided there are supportive policy changes.
Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue, highlighted that Bangladesh’s investment landscape remained fragile in the past year, citing high interest rates, policy inefficiencies, and elevated business costs as contributing factors.
Weak export growth, limited capital machinery imports, and challenges in profit repatriation for foreign investors reflected subdued private sector activities, Rahman noted, emphasizing the need for stronger institutions and infrastructure to revive investment momentum in 2026.
Exporters express concerns about the immediate future outlook, with Mohammad Hatem, President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), stating that the past year was exceptionally tough for export-driven investors, foreseeing no quick rebound due to banking obstacles, rising costs, and the reduction of export incentives under IMF-supported reforms.
Business leaders also highlight persistent structural obstacles, with Taskeen Ahmed, President of the Dhaka Chamber of Commerce and Industry (DCCI), mentioning high interest rates, liquidity shortages, and banking sector pressures impacting SMEs, while energy deficits and inflation continue to erode confidence.
Asif Ibrahim, former Chairperson of Business Initiative Leading Development (BUILD), pointed out that with GDP growth estimates at a decade-low of 3.7 to 3.9 percent in 2025, the outlook for 2026 hinges on whether political stability translates into substantial reforms.
Ibrahim stressed the importance of economic diversification, impactful reforms, and targeted investments in infrastructure and human resources for the current year.