What 2025 has in store for Bangladesh

Illustration: TBS

As 2024 comes to a close, Bangladesh finds itself at a pivotal economic moment. A survey conducted by Economic Intelligence Bangladesh (EIB), a joint research publication by The Business Standard and DataSense, provides insights into what lies ahead, capturing the hopes and concerns of business leaders as they look toward 2025.

With interim government's Chief Adviser Prof Muhammad Yunus announcing that elections will take place in late 2025 or early 2026, cloud of uncertainty has partly been removed in political front. The announcement also has brought some relief for the business community. But key challenges such as political instability, law-and-order issues, and high loan interest rates could create an uncertain business environment. Business leaders worry about the potential disruptions these issues may cause in investment and trade, which are vital for sustaining economic growth.
 
However, there's room for hope. On a positive note, remittances reached a record $26.67 billion in 2024, reflecting a significant growth compared to the previous year. This increase was driven by a 9% hike in the official dollar rate and reduced reliance on informal channels like hundi, ensuring more funds flowed through legal avenues. 
 
July, which saw raging student protests and brutal actions by the then government to suppress those, saw $2.69 billion in remittances, one of the highest monthly inflows ever recorded. These inflows have significantly bolstered Bangladesh's foreign exchange reserves, now standing at $21.33 billion. This reserve level provides crucial support for imports, stabilising the economy and enhancing the country's financial standing.
 
Exports are also showing consistent growth, with the ready-made garment (RMG) sector continuing to anchor the nation's economic output. The narrowing trade deficit, fueled by both strong exports and robust remittances, signals resilience amid global challenges. Business leaders have highlighted that tackling inflation, reforming the banking sector, and fostering better collaboration between the private and public sectors are critical to ensuring continued progress.

Many in the EIB survey have also emphasised the urgent need to combat corruption and enhance accountability. These measures are vital for reducing inefficiencies and attracting both foreign and domestic investments.

Ensuring affordable and reliable energy remains a key priority for supporting energy-intensive industries like manufacturing and aviation. The transition toward renewable energy sources could play a pivotal role, aligning with global sustainability trends while meeting domestic needs.

Additionally, potential shifts in US trade policies, particularly after the return of Donald Trump as president, could open up new avenues for Bangladeshi exports. Strategic efforts to diversify export markets and strengthen negotiation skills for fair share in global trade will be essential in capitalizing on these opportunities.

As Bangladesh steps into 2025, the path forward is clear: address challenges through bold reforms, ensure political and economic stability, and foster collaboration across all sectors. 

With record remittance inflows, shrinking trade deficits, and steady export growth, there's plenty of reason to be hopeful. By fostering innovation, ensuring transparency, and building on recent successes, Bangladesh is well-positioned to tackle challenges and move forward with confidence, paving the way for sustainable growth and prosperity.