Bangladesh Economy Facing Challenges | A struggling economy needs greater attention

The bleak economic outlook for Bangladesh, as recently highlighted by the Centre for Policy Dialogue (CPD), is concerning. In a paper titled “Navigating Expectations in Turbulent Times,” the think tank revealed that the interim government’s economic measures have yet to bring substantive improvements in people’s lives and to support businesses. Despite reform initiatives across various sectors, including the economy, any noticeable recovery or dynamism remains absent.

As many have pointed out, Bangladesh has a real opportunity to implement substantive changes in its taxation system during this transition period. Over the years, the country’s development activities have become increasingly dependent on debt due to its low tax-GDP ratio. To address this, Bangladesh must increase direct taxes and curb tax evasion. However, instead of prioritising these measures, the interim government has disappointingly adhered to an outdated approach by raising VAT—a regressive policy that disproportionately affects low-income groups. This move also contradicts the pro-people spirit of the historic July uprising.

Investment, or lack thereof, is another major concern highlighted by the CPD. While the presence of an elected government can positively influence investment, the interim administration has failed to significantly improve other critical factors that drive investment. As a result, a conducive environment has yet to be established, which is alarming. To attract investment, the government must urgently implement measures, such as setting up a one-stop service for businesses and developing adequate infrastructure. Engaging with relevant stakeholders to address bottlenecks in business operations is also essential.

Inflation is another pressing issue that the government has struggled to tackle. Despite repeated calls for stronger monitoring to prevent hoarding and market distortions, little progress has been made in that regard. Given the hardships faced by ordinary people due to sustained inflationary pressures, addressing this issue should have been a top priority.

The CPD has rightly emphasised that political and economic reforms must progress hand in hand, requiring a degree of political consensus. Achieving this will undoubtedly be challenging. Additionally, it must be acknowledged that the ousted Awami League government inflicted significant damage on the economy, which may take years to repair. However, the fact remains that the interim government has underperformed in addressing economic challenges and badly lacked the urgency and focus necessary to tackle these issues. It is high time it recognised the desperate need for an economic turnaround and took decisive action to deliver it.