Bangladesh is facing an intensifying economic crisis as disruptions in domestic production spread across key sectors, severely affecting exports, employment, and investor confidence.
Despite a recent uptick in remittance inflows and a slight recovery in foreign currency reserves, the real economy is reeling from a sustained slump in industrial output, exposing deep structural weaknesses.
Factories across the country—including in Dhaka, Gazipur, Narayanganj, and Savar—are struggling to maintain operations due to a 40 percent shortfall in natural gas supply. The situation is particularly severe in the ready-made garments (RMG) sector, which accounts for over 80% of Bangladesh’s export earnings. With production capacity crippled, factory owners are either shutting down lines or bearing exorbitant costs by using diesel, CNG, or LPG as alternative fuels. “The gas crisis has cut our production to half. We’re missing shipment deadlines and losing buyers,” said Mohammad Karim, a garment factory owner in Ashulia. “I’ve already laid off 150 workers in the last two months.”
According to the Export Promotion Bureau (EPB), export earnings fell to $3.01 billion in April 2025, the lowest monthly figure in the current fiscal year. This marks a steep drop from $4.25 billion in March. Year-on-year growth stood at a meager 0.86%, highlighting the scale of the collapse.
The consequences are also being felt in the labor market. Layoffs, delayed wages, and hiring freezes have become increasingly common in the textile, ceramic, steel, and food processing sectors. With industrial output falling, new employment opportunities have dried up, pushing thousands of workers into uncertainty.
At the same time, Bangladesh’s capital market is suffering from its longest downturn in history. Investor activity has plunged, further undercutting efforts to revive domestic investment. Private sector leaders argue that without a stable energy supply and consistent policy direction, confidence in the investment climate will remain dangerously low. Experts contend that the crisis is the result of years of policy neglect in strengthening domestic production capacity. While the government has recently received fresh foreign loans and record-high remittance inflows—$2.75 billion in April—the benefits are being offset by economic stagnation at home.
"Reserves have improved, but the economy’s internal health is deteriorating," said Dr. Rezaul Haque, an economist at Dhaka University.
"This imbalance—high remittance but low production—is not sustainable. If this continues, we’ll face even deeper currency pressure and higher unemployment." Bangladesh’s public finances are also under strain. Debt servicing now consumes nearly half of total government revenue, while the Annual Development Programme (ADP) implementation rate has slumped to 37%—the lowest in a decade. A revenue shortfall of over Tk 65,000 crore has further limited the government’s ability to support the economy through fiscal measures.
Meanwhile, inflation is making daily life more difficult for ordinary citizens. Prices of essentials like rice, lentils, and oil, which had briefly stabilized during Ramadan, have started climbing again. Consumers across income groups are cutting back, and even middle-class families are struggling to maintain basic consumption levels.
According to the World Bank, Bangladesh’s GDP growth could slow to 3.5% by year-end if current trends persist, potentially marking the weakest full-year economic performance since 2009. The country is falling back beyond even regional peers, despite recent remittance growth projections and foreign loan disbursements.
In response, investment sentiment has soured. Business leaders say they are in "survival mode." The stagnation in production and the uncertainty around utility services have forced them to scale back expansion plans. Many are now simply watching from the sidelines, having lost the ability—and willingness—to commit new capital.
“We’ve seen no substantial policy shift to support industries. No incentives, no energy plan, no confidence-building,” said an official of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA). “The government seems content to ride on remittances and loans.”
Development on Pause: The broader development agenda has also slowed. The government’s Annual Development Programme (ADP) implementation in the first nine months (July–March) of FY25 was just 37 percent—the lowest in the last decade. Much of the funds received from foreign sources have been channeled toward servicing earlier debts instead of initiating productive projects.
The public-private divide has widened. For small and medium enterprises (SMEs), long considered the backbone of domestic employment, are finding it increasingly difficult to operate under a regime of high inflation, credit shortage, and regulatory uncertainty. The tax revenue shortfall of around over Tk 65,000 crore has further constrained the government’s investment in social and economic infrastructure.
This is happening at a time when the urban poor and lower-middle classes are grappling with runaway food prices and falling incomes. Inflation and Daily Necessities: In key food and grocery retail zones, which temporarily stabilized before Eid, prices are climbing again. Merchants at Khatunganj, Karwan Bazar and other major city markets report rising wholesale prices for staples like lentils, oil, and onions.
“All of a sudden prices have hiked, and transportation costs have doubled. Suppliers are holding back until our cost estimates are confirmed,” said one market trader in Dhaka. With the inflationary pressure, clubbed with delayed wage payments and job insecurity, a sudden reduction in consumer spending across the board—even among the middle class.
