A NUMBER of challenges persist in economic recovery, especially in poverty reduction, employment generation and business environment despite some improvement in the macroeconomic sector in the past year. While it is understandable that the authoritarian and kleptocratic Awami League regime, toppled in a mass uprising in August 2024, left the economy in a shattered state, the interim government鈥檚 performance has not also lived up to people鈥檚 expectations. The government has managed to rebuild foreign currency reserve and stabilise the currency exchange rate to some extent, riding on record remittance growth and positive export performance. It has, however, failed to boost private-sector credit growth, reflected in an increase in unemployment and in extreme poverty rate. Bangladesh Bank data show that private sector credit growth declined to 6.40 per cent in June 2025, the lowest level in 22 years. This reflects a deepening crisis in the banking and business sectors. The monetary policy that the Bangladesh Bank announced in January has projected a private sector credit growth target of 9.8 per cent until July 2025. The actual growth has, however, remained well below the target, raising concern about the economy鈥檚 underlying momentum and the prevailing business environment.
Given that the private sector accounts for about 90 per cent of employments, the decline in credit growth in the sector indicates a stagnant business environment and the consequences, which are far-reaching, are alarming. Unemployment has already increased. The number of unemployed people rose to 27.3 lakh in the fourth quarter of 2024, compared with 24 lakh in the same period of 2023, according to conservative figures of the Bureau of Statistics. Extreme poverty has also increased, with an additional 30 lakh people feared to fall into extreme poverty this calendar year as the rate is projected to increase from 7.7 per cent to 9.3 per cent, as the Bangladesh Development Update released by the World Bank in April shows. The Multidimensional Poverty Index, released by the General Economics Division on July 31, also paints a bleak picture of the poverty situation. The index says that one in four people is poor and about 3.98 crore individuals suffer multidimensional poverty. Economists attribute the sluggish economic recovery to multiple interrelated factors, including a stagnant business climate, political instability, weak law and order, surging lending rates and excessive government borrowing from commercial banks.
The government should, therefore, address the causes that undermine private-sector credit growth, increase unemployment and adds to extreme poverty rate. It should take decisive steps to improve the business climate and facilitate job creation.
