Bangladesh’s economy is facing mounting challenges driven by a mix of global and domestic pressures. Sanctions, tariffs and restrictions in international markets are affecting exports and investment, while inflation, slowing growth and rising debt are placing additional strain on economic stability. Economists warn that unless these risks are identified early and addressed decisively, the situation could worsen significantly.
According to the World Economic Forum’s (WEF) recently published Global Risks Assessment, crime and illegal economic activities pose the greatest threat to Bangladesh’s economy this year, followed closely by geo-economic conflicts. These risks go beyond diplomatic tensions, directly affecting exports, foreign exchange reserves, employment and investment flows. As powerful countries impose new trade and investment barriers to protect their interests, emerging economies are finding it increasingly difficult to compete in global markets. With its export-dependent growth model, Bangladesh is particularly exposed.
Dr Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), told Bangladesh Pratidin that the rising geopolitical tensions are now shaping the country’s economic future.
“Bangladesh faces five major risks that are directly undermining economic stability and development,” she said. “The Russia–Ukraine war, instability in the Middle East, US–China strategic competition, trade sanctions and global supply chain restructuring are exerting pressure on exports, energy security, inflation, remittances and investment flows.”
She noted that the global economy is becoming increasingly fragmented, a trend that disproportionately affects developing countries. “Internal reforms alone will not be sufficient,” she said. “Bangladesh must adopt strategies that reflect the new geo-economic reality. If we are not careful, these risks will intensify.”
Dr Khatun stressed the urgency of strengthening good governance, curbing crime, implementing necessary economic reforms and maintaining balanced external relations. “Without effective action in these areas, it will be extremely difficult to face the challenges ahead,” she added.
WEF identifies inflation as the third major risk to the economy. Persistently high prices have eroded purchasing power, raising the cost of living for households and increasing production costs for businesses and industries. Although inflation has eased slightly in recent months, economists say meaningful relief remains distant.
The fourth risk is an economic slowdown. Fears of a global recession, sluggish domestic investment and mounting pressure to repay foreign debt have heightened concerns over weaker growth. Forecasts by international organizations reinforce these fears.
The fifth and most serious risk is the growing debt burden at government, corporate and household levels. A rising share of the national budget is being spent on interest payments, limiting resources for development. Economists warn that if this trend continues, Bangladesh could fall into a “middle-income trap”.
These risks are deeply interconnected. Crime and illicit economic activity deter investment, geo-economic conflicts restrict market access, and inflation combined with debt pressures erodes living standards. Together, they are steadily undermining the stability and resilience of Bangladesh’s economy.
Bd-pratidin English/ Jisan
