Concerns are mounting over Bangladesh’s investment environment as private-sector bank credit growth has remained below 7% for six consecutive months, signalling a prolonged slowdown in new investment. By the end of November 2025, private-sector credit growth fell to 6.58%, significantly below the target set by Bangladesh Bank, prompting warnings from economists about potential adverse effects on employment, industrial output and overall economic growth.
Economists say the subdued credit expansion reflects limited demand for new borrowing, indicating that few new industrial ventures or expansionary investments are taking place. Professor Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue (CPD), said the current level of credit growth suggested that investment activity remained extremely weak. He noted that lower investment directly affects job creation and gross domestic product growth, adding that declining investment would inevitably lead to higher unemployment and slower economic expansion.
Bangladesh Bank data show that private-sector credit disbursement stood at Taka 177,382 crore in November 2025, compared with Taka 166,432 crore in the same month a year earlier, resulting in year-on-year growth of 6.58%. In October, private-sector credit growth had fallen to a historic low of 6.23%.
Further signs of investment stagnation have emerged from import data. During the July–November period of the current fiscal year, payments for capital machinery imports declined by more than 16%, a trend economists view as clear evidence of a freeze in new investment. Bankers attribute the situation to high interest rates, weak market demand and persistent policy uncertainty, which have made entrepreneurs reluctant to take on new loans.
Industry leaders have also pointed to political instability as a major deterrent to investment. Mohammad Hatem, President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said the prevailing political environment was not conducive to business. He argued that instability and deteriorating law and order discouraged both domestic and foreign investors, noting that large-scale investments in machinery carried substantial risks if factories could not operate smoothly for extended periods.
Senior banking officials report that following recent political changes, several large industrial enterprises have either shut down entirely or are operating on a limited scale. Factories belonging to major industrial groups, including Nasa, Beximco and Gazi, are reported to be fully or partially closed, while those still operating are producing at 60–70% below their previous capacity.
High borrowing costs have further exacerbated the situation. With bank lending rates reaching 15–16%, business profitability has declined sharply, and entrepreneurs say that undertaking new investment has become virtually unviable under such conditions.
Operational challenges, particularly prolonged gas shortages, have also weighed heavily on businesses. The energy crisis, which has persisted for several months, has disrupted factory operations and prevented firms from achieving desired production levels, leading to mounting losses. Business owners say repeated appeals to the government have failed to yield effective solutions, resulting in reduced expansion plans.
Mohammad Hatem added that severe shortages of gas and electricity have become a critical concern for investors, even before committing capital. He said the government had so far been unable to ensure uninterrupted energy supplies, forcing factories to operate below capacity and pushing up production costs, which in turn further eroded profitability.
