The economic cost of delaying the election

Bangladesh today stands at an intersection that is both economically and politically significant.

At first glance, the country has shown remarkable resilience. Despite the weight of global inflation, it has managed, against the odds, to keep prices more or less stable during the current interim administration. Though food and energy costs remain a worry for many households, a mix of subsidies, fiscal steps, and strict monetary policies taken by the interim government over the past year has helped prevent the kind of runaway inflation Sri Lanka and Pakistan experienced in 2022. Foreign exchange reserves have slowly improved, and the ready-made garment industry continues to play its part, keeping export earnings steady and supporting the balance of payments.

These are no small feats, and the government does deserve recognition for them. Officials will, in the coming months, understandably showcase these achievements as evidence of sound stewardship. A policymaker I spoke with confidently remarked that Bangladesh has "done better than its peers," and in a narrow sense, he is right. In an unstable global economy, maintaining macroeconomic steadiness does matter.

But here is the catch: macroeconomic steadiness without political stability is a fragile equilibrium. It can buy you time; it cannot buy you certainty. And in economics, certainty is often more valuable than a single quarter of good data.

The political vacuum that Bangladesh finds itself in is not just a constitutional or moral problem. It carries a price tag. Unfortunately, the rhetoric of our political parties is often about who should rule. The economic costs of the election delays are not given much thought.

Yet, the ordinary people feel it. Investors, both local and foreign, feel it. Businesses feel it. When elections are postponed or democratic clarity is absent, the economy pays. Many believe that so long as inflation is managed and exports continue, the economy is "safe." But this overlooks the less visible, longer-term damage caused by uncertainty.

Numbers alone don't persuade investors. Capital has a political memory. It recalls past instability, delays, and voids. And it reacts accordingly.

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The future of Bangladesh depends on trust

Foreign direct investment (FDI) into Bangladesh has been sluggish in recent years, despite global companies showing interest. I have spoken with representatives of major multinationals and hospitality groups who have slowed their projects here. Some luxury hotels that already laid foundations have deliberately held back on opening. The reason is simple: they do not know what direction the country will take, or whether political stability will hold.

This hesitation trickles down. Local entrepreneurs also pause their plans. Friends of mine in the restaurant business, hardly the sector most tied to politics, are reluctant to open new branches. "Let's wait until we know where the country is headed," is the common refrain. That hesitation is itself an economic cost, invisible in today's inflation numbers but corrosive over time.

Why does this matter so much? Because long-term investments are rarely based on present figures alone. They depend on the trajectory. Investors want to know if Bangladesh is moving towards being a digitally focused economy that prioritises tech, or a manufacturing powerhouse offering stability, or a services hub. They want to understand the ethos of the political leadership. Without that clarity, their capital stays frozen.

In economics, perception is as important as performance. When people feel uncertain, they hold back. This causes families to delay purchases, businesses to stall investments, and exporters to hesitate taking long-term orders. Even if the government points to stable prices or rising reserves, mistrust among individuals doesn't go away.

Take, for example, Sri Lanka's economic crisis that came after years of denial that drained investors' confidence. Pakistan is another case that shows how repeated delays and political churn keep investors wary and its currency unstable.

This is not only about investors. When garment buyers hesitate to place orders, jobs are at risk. When international hotels pause projects, construction workers and service staff lose opportunities. Visa restrictions from several countries are already making trade and travel more difficult for Bangladeshis. For our economy that depends heavily on exports, these hurdles are more than just diplomatic snubs; they translate into higher costs and tougher battles for businesses trying to win contracts overseas.

In today's globalised world, political uncertainty at home only makes things worse. When combined with restrictions abroad, it leaves small and medium-sized enterprises squeezed from both sides, struggling to survive.

We often speak of democracy as a moral or constitutional right. But it is also an economic asset. A government with a fresh, credible mandate has the legitimacy to negotiate trade deals, attract long-term investment, and implement reforms with public support.

When citizens believe in the direction of their country, they plan, invest, and spend with more confidence. When businesses believe in stable governance, they commit capital to long-term projects. Democracy creates that alignment between citizens, investors, and the state.

To some people, delaying elections may seem to preserve calm in the short run, but it risks storing up a storm. The more delayed the political settlement, the more prolonged the economic hesitation. By the time data finally reflects this, much damage will already have been done.

Bangladesh still has time to avoid the paths of Sri Lanka and Pakistan. It still has the opportunity to convert today's fragile calm into genuine resilience. But doing so requires urgency. A clear, credible, time-bound return to democratic governance is not just a political necessity, it is also an economic one. The sooner political clarity is restored, the sooner businesses, both local and global, will begin investing again. The economy will not revive simply because of inflation numbers or export earnings. It will revive when confidence returns.

Ashfaq Zaman is founder of Dhaka Forum and a strategic international affairs expert.

Views expressed in this article are the author's own.

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