Slow GDP growth poses serious social consequences

The national economy of Bangladesh is facing one of its toughest tests in decades. The provisional GDP growth for this fiscal year is only 3.97 percent, the lowest in 34 years apart from the pandemic period. It is true that a sluggish growth rate can have different interpretations when compared with previous years, but few can deny the adverse state of many economic indicators even after more than a year of the interim government.

The numbers published by the Bangladesh Bureau of Statistics tell a grim story. Growth has fallen well below the revised target, dragged down by weak agriculture, slower services and fragile industry. While much of the blame is directed at the previous government's mismanagement, the interim administration cannot escape responsibility. Failures in policy consistency, governance and financial management have magnified the slowdown. The cracks in the system are now more visible, and ordinary people are paying the price.

We have seen repeated uncertainties during this period, with shifting rules, sudden regulatory changes and selective enforcement that have reflected a lack of institutional trust and policy clarity. Without transparency and consistency, investors lose confidence. Law and order and the reliability of infrastructure have deteriorated. Exporters, especially in the readymade garment sector, have faced power cuts, port delays and transport disruption. Smooth trade operations have become a big hurdle.

Credit growth has contracted sharply. Domestic credit growth fell to 8.03 percent year-on-year in April 2025, down from 11.19 percent a year earlier. Weak private sector credit growth means less economic activity and fewer investments in machinery, jobs or business expansion. Inflation has remained stubbornly high throughout this period. Rising living costs not only squeeze households but also erode business competitiveness by raising input prices. We have also seen strikes and disruption at the National Board of Revenue. As a result, revenue receipts grew by only 3.96 percent in July-April FY25, far below what was needed to ensure stable social support. Weak finances and sluggish revenue collection mean the government has little room to stimulate growth.

Slow economic growth has serious consequences. Unemployment rises as businesses freeze hiring, cut jobs and reduce costs. Young graduates are entering a shrinking job market, while semi-skilled workers remain underemployed. Household incomes are falling while prices continue to climb. High inflation erodes savings and purchasing power, hitting the poor and middle class hardest. Families are being forced to cut back on essentials such as food, healthcare and education.

At the national level, exports and foreign investment are suffering compared with earlier years. Investors remain cautious because of political uncertainty and the fragile rule of law. Experts say that Bangladesh's vital RMG industry is still at risk of losing competitiveness. Fresh foreign direct investment has dried up. Meanwhile, government debt pressures are growing. With lower tax receipts and rising borrowing, interest payments consume funds that should have been allocated to health, education and development. Perhaps most alarmingly, public trust is eroding. As people and the younger generation see inflation eating away at their wages and no new opportunities on the horizon, frustration builds. That fuels instability, which in turn further weakens both the economy and society.

Yet there is hope, genuine hope, if action is taken with courage. Bangladesh has overcome crises before. From famine to flood, from political turmoil to stability, the country has always shown resilience. Low GDP growth is not just a number. It is a warning sign of deep cracks in the national foundation.

Left unchecked, it could lead to joblessness, brain drain and deeper poverty. But if we act proactively, it could become the spark that forces urgent reform and revitalisation. Clarity in policy, fairness in justice, trust in institutions and targeted support for those pushed to the margins can reverse the drift.

The writer is a senior banker