May 6, 2025 7:56 am
Full News

Credit Flow Lowest in 21 Years; Domestic Investment Sees Downturn in Bangladesh

n the first eight months of the 2024–25 fiscal year, credit flow to the private sector in Bangladesh has stagnated significantly. According to the latest data from Bangladesh Bank, credit growth during this period was only 2.63%, nearly half of the 5.53% seen in the same period last year, and the lowest in 21 years. By the end of June 2024, total private sector credit stood at Tk 16.41 trillion, rising slightly to Tk 16.84 trillion in February.

Experts attribute this decline to political uncertainty and a weak investment climate, which discourage entrepreneurs from making new investments. Economists say the increase in total credit is not due to real lending but results from higher interest rates and the accumulation of suspended interest.

High interest rates have increased business costs, particularly affecting small and medium enterprises (SMEs).
Dr. Selim Raihan, Executive Director of SANEM, said, “High interest rates are discouraging investment, increasing default risk, and slowing economic growth.” He added that strict monetary policies have failed to control inflation but have intensified the crisis in the private sector.
Banks Shifting Focus to Government Bonds

Facing this stagnation, banks are increasingly investing in safer, higher-return government treasury bills and bonds, offering 11–13% interest. This shift has reduced the appetite for private sector lending. Political instability and an unfavorable investment environment have further worsened the situation.

Syed Mahbubur Rahman, Managing Director of Mutual Trust Bank, said, “In the absence of stability, entrepreneurs focus more on sustaining existing businesses rather than making new investments.”
Import Decline Disrupts Production

Between July and February of FY 2024–25, overall imports rose by 5.33%, but imports of capital machinery fell by 26.02%. Raw materials and intermediate goods imports also declined. According to L/C (Letter of Credit) data up to March, petroleum, intermediate goods, and machinery imports dropped by 3.83%, 1.61%, and 26%, respectively.

Experts warn that these declines pose a serious threat to industrial output, with many factories operating below capacity or shutting down due to shortages.
Investment Paralysis Amid Credit Collapse

As of February 2025, total bank loan growth was only 6.82%, the lowest since 2004. Entrepreneurs are refraining from new investments due to 9–16% interest rates and market uncertainty, making it increasingly difficult to sustain existing businesses.

Anwar-ul-Alam Chowdhury Parvez, President of the Bangladesh Chamber of Industries, warned, “Without improved law and order, energy supply, and more tolerable interest rates, industrialization will collapse.”
Political Uncertainty and Foreign Investment

Since the events of August 5, 2024, political stability remains elusive. Masrur Reaz, Chairman of Policy Exchange Bangladesh, said, “With uncertainty over the return of democratic governance, both local and foreign investors are staying on the sidelines.”

Javed Akhtar, President of the Foreign Investors’ Chamber, added that unless customs and tax reforms are implemented and the business climate improves, foreign investment will not grow.
Employment and GDP Showing Negative Trends

According to the Bangladesh Bureau of Statistics, unemployment rose to 2.66 million in Q3 of 2024—an increase of 170,000 in one year. The labor force shrank by 1.95 million over the same period.

GDP growth also slowed to 4.22% in FY 2023–24, below government forecasts. Revenue shortfalls have grown, with a Tk 65,665 crore deficit in the first nine months of the current fiscal year.
Export Income Hits 10-Month Low in April; RMG Sector Also Affected

April brought a major shock to exports. Export earnings fell to $3.01 billion, the lowest in 10 months and down $1.24 billion from March. Readymade garments (RMG) brought in $32.64 billion over 10 months (up 10%), but April earnings were only $2.39 billion, just 0.44% higher than April 2024.

Woven garment exports in April dropped 4.65%, though knitwear grew 5.08%.

Mohiyuddin Rubel, former BGMEA director and managing director of Bangladesh Apparel Exchange, said, “Though yearly growth remains positive, April’s performance is a wake-up call. To remain competitive, we must strengthen our supply chain and production capacity.”
What Needs to Be Done

Experts recommend the following priority actions to recover from the ongoing crisis:

Restore political stability and create an investment-friendly climate.

Reform the banking sector and bring interest rates to a rational level.

Digitize and simplify customs and tax systems.

Ensure energy security, provide investment incentives, and offer easier loan facilities.

The sooner these steps are implemented, the faster the industrial sector will rebound, leading to broader economic stability.

Related News
Bilawal Bhutto Issues Stark Warning to India Over Indus Waters Treaty Suspension 
Anderson returns to professional cricket with T20
European Leaders to Ramp Up Defence Spending and Support Ukraine Amid US Aid Suspension
97th Oscars Shortlists Announced Across 10 Categories
In a closely contested presidential race: Times/Siena polls
Donald Trump Appoints Kashyap Patel as FBI Director
Related Posts
Export Income Hits Lowest in April in 10 Months, RMG Sector Also Affected in Banglades
Registration of 118,000 Newly Arrived Rohingyas in Cox’s Bazar—No Space Left in Camps
Russia-Ukraine Ceasefire Possible “At Any Moment
Pakistan Accuses India of Violating Indus Waters Treaty, Prepares Formal Notice
India Suspends Indus Water Treaty Amid Rising Tensions with Pakistan
Myanmar Junta May Weaponize Nuclear Power Plant, Warns UN Envoy
More News

Trump Wants a Quick End to the Ukraine-Russia War

Newly elected U.S. President Donald Trump wants the ongoing Ukraine-Russia conflict to end as quickly as possible. U.S. politician Keith Kellogg, appointed as a special envoy to Ukraine, has disclosed this information. On Thursday (January 9), Russian news outlet TASS confirmed the news. In an interview with U.S. media outlet Fox News, Keith Kellogg stated […]

Fire on Metro and police Killed in Bangladesh: One of the coordinators of the movement gave confession today

In the wake of the recent anti-discrimination movement that led to the removal of the Awami League government in Bangladesh, a prominent spokesperson has stirred controversy with explosive remarks. Hassib Al Islam, a coordinator of the movement, suggested that the revolution would not have succeeded without significant violence, including the killing of police officers. Following […]

US Senator Gary Peters to Visit Dhaka on Tuesday for High-Level Meetings

US Democratic Senator Gary Charles Peters is set to arrive in Dhaka past midnight on Tuesday for a one-day visit aimed at strengthening bilateral ties between the United States and Bangladesh. During his visit, the 67-year-old senator will hold separate meetings with the chiefs of the three armed forces—Army, Navy, and Air Force—as well as […]

Avengers Director Reveals Secret Talks Before MCU Comeback

Anthony Russo, co-director of the Avengers movies, has opened up about secret discussions that took place before his unexpected return to the Marvel Cinematic Universe (MCU). In 2022, Marvel Studios announced that Phase 6 would conclude with two new Avengers films, originally titled Avengers: Doomsday and Avengers: Secret Wars. The Russo brothers, who helmed Avengers: […]

Is Doctor Strange Being Omitted from the Avengers?

Benedict Cumberbatch has confirmed that his iconic character, Doctor Strange, will not be appearing in the next Avengers film, Doomsday. Despite this, Cumberbatch reassured fans that Doctor Strange has a significant role to play in the upcoming Secret Wars sequel, teasing a possible third solo movie for the character. In a candid interview with Variety, […]

Study Reveals Telegram’s Algorithm Promotes Extremist Content

A new study by the US-based Southern Poverty Law Center (SPLC) reveals that Telegram, a popular messaging app, uses an algorithm that inadvertently promotes extremist content. The research, shared exclusively with the BBC, highlights how Telegram’s “similar channels” feature, introduced last year, recommends extremist content even to users exploring benign topics like celebrities or technology.The […]

All India Muslim Jamaat Issues Fatwa Against Tamil Nadu Politician Vijay Amid Waqf Act Controversy

Bareilly (Uttar Pradesh), April 17 – Maulana Shahabuddin Razvi Bareilvi, President of the All India Muslim Jamaat, has issued a fatwa against Tamil Nadu’s actor-turned-politician Vijay, the chief of the Tamil Nadu Vijay Karthik (TVK) party. The move comes after accusations that Vijay has portrayed Muslims negatively in his films and invited individuals involved in […]

Trump’s Inauguration Crowd Size Controversy Resurfaces Ahead of Second Swearing-In

Washington, January 13, 2025 – On the morning after Donald Trump’s first inauguration in January 2017, acting National Park Service (NPS) director Mike Reynolds received a call from the new President. Trump, a Republican, was unhappy with photographs published by media outlets suggesting that his inauguration crowd at Washington’s National Mall was smaller than the […]

Russia’s Ballistic Missile Strike Sparks Outcry and Global Concern

Zelenskyy Condemns Russian Escalation as Severe Ukrainian President Volodymyr Zelenskyy has condemned Russia’s use of an experimental ballistic missile in an attack on the city of Dnipro, calling it a “clear and severe escalation” in the ongoing war. He urged the international community to respond decisively, emphasizing that “pressure is needed” to force Russia into […]

Extra BSF member deployed at Bangladesh boarder

In light of the current situation in Bangladesh, the Indian Border Security Force (BSF) has intensified security measures along the India-Bangladesh border. According to a report by Indian news agency ANI on Wednesday, the BSF has deployed additional personnel along the border in response to increasing violence and instability in Bangladesh. The report highlights that […]