The business environment in Bangladesh has entered what economists describe as one of the most hostile and unsustainable phases in recent history. The combination of political uncertainty, a deteriorating law-and-order situation, declining business confidence, and policy missteps has created a climate in which sustaining economic activity has become increasingly difficult.
According to a Daily Industry review of the current market and expert observations, the ongoing unfriendly business environment is imposing a high risk for long-term economic stability. The trend is alarming: industrial imports are collapsing, investment is stagnant, factories are closing, and thousands of workers are losing their jobs every week.
Business leaders warn that unless stability is restored and confidence rebuilt, Bangladesh risks a prolonged period of stagnation, or worse, a systemic economic crisis.
Industrial Imports Collapse, Factory Output Halved: A drastic fall in the import of industrial raw materials and capital machinery-declining in some categories by almost 50 percent-has significantly disrupted industrial production. Manufacturers report that they can no longer maintain full-capacity production due to shortages of essential inputs.
Many factories are operating at 40-60% capacity, while others have already shut their doors.
The Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) notes that the situation is spiraling out of control. BKMEA President Mohammad Hatem, speaking to Daily Industry, said: “Under such a hostile situation, doing business is becoming impossible for the stakeholders. Businesses are struggling to survive, and those unable to cope are closing down. Factories are shutting one after another, causing mass job losses.”
Hatem said the crisis is “unprecedented in recent memory”, warning that the combination of low orders, import restrictions, and dollar shortages is pushing the sector toward collapse.
Dollar Shortage, Skyrocketing Interest Rates, and Credit Crunch Cripple Industry: The banking sector-already under pressure due to the historic surge in default loans-has virtually shut its doors to private sector credit. With banks saddled by liquidity shortages and regulatory pressures, access to working capital has become increasingly limited. Exporters and local manufacturers say they cannot open new Letters of Credit (LCs) because banks do not have enough dollars. Import payments remain stuck, sometimes for months, delaying shipments and disrupting supply chains. Interest rates have surged to multi-year highs, further discouraging borrowing. Businesses that previously could manage operations with moderate borrowing now face interest rates that make expansion or even maintaining current operations untenable.
A senior official of a private commercial bank told Daily Industry: “The banking system is in survival mode. We are prioritizing import payments and essential food items. Long-term industrial LCs or non-essential imports have almost stopped. Naturally, this has a direct negative impact on business sustainability.”
Investment Stagnant, Inflation High, and Economic Activity Slowing: With inflation remaining persistently high, especially for food and essential goods, consumer spending has dropped and domestic demand has weakened. Businesses are reporting dramatic declines in sales across retail, wholesale, construction, and manufacturing sectors. Private investment-already stagnant for several years-has now touched its lowest point in a decade.
Economists say the slowdown is structural, not temporary. Dr. Zahid Hussain, former lead economist at the World Bank, shared insights with Daily Industry: “The economy is under severe stress from multiple fronts-political instability, financial fragility, and policy inconsistency. Investment will not return until there is clarity about the political transition and confidence in economic governance. Without fresh investment, growth prospects will continue to decline.” He warned that if the situation persists, Bangladesh may fall into a prolonged low-growth trap, similar to what other politically volatile economies have experienced.
Political Uncertainty Deepens Business Anxiety: The unstable political environment following the July uprising has created a vacuum of confidence. Businesses, investors, and international buyers are all hesitating to make forward commitments. The deteriorating law-and-order situation, marked by increasing political clashes, vandalism, and intimidation, is also hurting supply chains. Transport disruptions, road blockades, and sudden strikes in some regions have added to logistics costs and uncertainty.
A Daily Industry investigation across Dhaka, Gazipur, Chattogram, and Narayanganj found that many factories are laying off workers quietly to avoid unrest. Landlords in industrial clusters report hundreds of workers migrating back to villages after losing jobs.
Policy Missteps Shake External Trade and Global Buyers: Business leaders say the interim government’s misaligned policy decisions have further damaged global trade relationships. Exporters in the garment and leather sectors report cancellations and deferred orders due to fears of shipment delays and unstable production conditions. Some major retailers have shifted part of their sourcing to Vietnam and Indonesia as a precaution.
A Dhaka Chamber of Commerce and Industry (DCCI) director told Daily Industry: “International buyers want predictability. What they are seeing now is uncertainty, risk, and a lack of policy direction. That alone is enough for them to hold back new orders.”
Economists also point to trade policy inconsistencies, sudden tariff changes, and shifting import restrictions as contributing factors affecting Bangladesh’s global credibility.
Workers Losing Jobs as Factories Close One After Another: One of the most devastating effects of the crisis is the rising unemployment. In the garment, textile, leather, and light engineering sectors, thousands of workers have already been laid off due to factory shutdowns and reduced production.
A labor rights organization estimates that over 200,000 workers may face job threats if the current situation persists for another quarter. A factory owner in Gazipur told Daily Industry: “We cannot sustain operations. Raw materials are scarce, orders are low, banks won’t finance, and costs are rising. Closing the factory was the only option.”
Experts: Sustainability Is Impossible Without Stability: Leading economists argue that it will be impossible for the economy to regain momentum until a fully functional, stable political government is in place.
Dr. Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue (CPD), said: “Boosting revenue will require reviving business activity and private investment. That cannot happen without political clarity, banking reforms, and restoring business confidence.” He emphasized that heavy pressure on businesses-through restrictive import policies, higher costs, and unstable governance-goes against economic sustainability.
A Warning for the Future: Economists warn that if the current economic contraction continues without intervention, the country may face: A surge in unemployment, Declining export earnings, Rising poverty rates, Banking insolvency risks, Long-term damage to investor confidence.
Bangladesh’s economic resilience, built over decades, is being tested. Without urgent corrective measures, the country could slip into a multi-year economic stagnation, reversing hard-won development gains.
