As Bangladesh approaches the halfway point of August 2025, the country finds itself at a pivotal economic and political crossroads. One year into the tenure of the interim government, led by Muhammad Yunus, the nation’s economy is no longer teetering on the edge of collapse. Yet, for all the progress in stabilizing key macroeconomic indicators, a pervasive sense of uncertainty and fragile investor confidence continues to cloud the country’s prospects. With fresh elections now scheduled for before Ramadan in February 2026, as announced by Yunus, the next six months will be decisive in determining whether Bangladesh can transition from a period of crisis management to sustainable, inclusive growth.
It’s hard to forget the tumultuous events of August 5, 2024, when the student-led uprising forced Prime Minister Sheikh Hasina Wajed and her Awami League party from power, culminating in her flight to India. The final months of her regime were marked by police violence, disappearances of young dissidents, and widespread harassment of opposition voices. According to AFP, the aftermath left behind a deeply corrupt and fragile economic system, plagued by rampant money laundering and a banking sector in crisis.
In the year since, the interim government has made undeniable strides. As reported by The Daily Star, the administration managed to stem the freefall of foreign exchange reserves, curb money laundering, and bolster remittance inflows through tighter financial monitoring. Inflation, which had hovered stubbornly high, has finally begun to ease. These achievements, while significant, have not translated into renewed confidence among investors or the broader public.
Economists and business leaders alike agree on the duality of the government’s performance. AK Enamul Haque, director general of the Bangladesh Institute of Development Studies (BIDS), cautioned against expecting sweeping reforms from a transitional administration. "It is not right to expect too much from an interim government, because long-term economic stability is not something that can be achieved during the tenure of such an interim setup," Haque told The Daily Star. He acknowledged improvements in various areas but noted that "change is happening slowly" and uncertainty is holding back investment.
Haque pointed out that, although advisers are no longer involved in the kind of corruption seen under the previous regime, the underlying bureaucracy remains unchanged. "Nothing has changed there. The same people are in place, doing the same things," he remarked. He also stressed the importance of laying the legal groundwork for future reforms, even if the interim government cannot complete them in its limited time.
From the perspective of the business community, the mood is even more cautious. Anwar-ul-Alam Chowdhury Parvez, president of the Bangladesh Chamber of Industries (BCI), described the investment climate as "bleak" and criticized the government’s lack of engagement with key stakeholders. "Why would businesses invest when there is no policy predictability or institutional support? Costs of business are high, demand is low, interest rates are up, and even gas supplies are inconsistent. As a result, industries are slowing down, layoffs are rising, and unemployment is surging," Parvez told The Daily Star. He credited the government for stabilizing foreign exchange reserves and improving remittance flows, but argued that "the confidence crisis has only deepened."
Private sector credit growth fell to 6.4 percent in June 2025, well below the 7.2 percent target set by Bangladesh Bank, and non-performing loans reached a record Tk 4.20 lakh crore by March. Inflation, though down from its peak, remains close to 9 percent, putting continued pressure on households and businesses alike. Parvez warned that without a political settlement and an elected government, investor confidence would not return, leaving the country stuck in a prolonged phase of uncertainty.
Selim Raihan, executive director of the South Asian Network on Economic Modeling (Sanem), offered a similarly mixed assessment. "Some progress could have been made over the past year. Now, looking back, I am not confident about the sustainability of the few successes we did see," he said in an interview with The Daily Star. Raihan acknowledged improvements in export earnings and remittances, but criticized the lack of follow-up on key reform reports and the government’s failure to restore business confidence. He was particularly concerned about the lack of transparency and clarity in the government’s reform agenda, which he believes has stifled job creation and left investors wary.
The disconnect between policymakers and the private sector has only widened, according to Rizwan Rahman, former president of the Dhaka Chamber of Commerce and Industry (DCCI). He accused the interim government of treating business leaders as "suspects" rather than partners, and lamented the absence of meaningful collaboration. "Anyone who prospered in the 16 years of the Awami League government is viewed with suspicion. That is not only unjust, it is damaging," Rahman said. He contrasted the current administration’s approach with that of the 2007-08 caretaker government, which actively engaged with the private sector and tracked implementation of reforms.
Rahman was especially critical of unilateral policymaking and the government’s tendency to host flashy investment summits abroad while ignoring business leaders at home. "We organise flashy investment summits for foreign investors, yet we cannot invite our own business leaders properly," he noted. He argued that the erosion of institutional justice and selective law enforcement have further undermined the business environment.
Despite these challenges, there have been some bright spots. The steady supply and strong stocks of rice have made a shortage unlikely this year, according to Daily Sun. Inflation, while still high, has begun to ease, and remittance inflows remain robust. The interim government’s efforts to enhance oversight of financial channels and reduce illegal capital flight have been praised as important structural steps forward.
Looking ahead, the consensus among economists and business leaders is that the interim government should focus its remaining time on achievable reforms and laying the groundwork for a fairer economy. As Haque put it, "If they can temper their expectations and work on a few specific areas, they should. At the very least, if they can build the foundation of reform, the next government will be able to carry it forward."
With elections on the horizon and political uncertainty still looming, Bangladesh’s path to economic renewal remains fraught with challenges. But with careful stewardship and a renewed commitment to inclusive governance, the country may yet find its footing and deliver on the promise of a more prosperous future.
