Address structural challenges to revive private sector-led growth: business leaders

Business leaders and economists have identified several structural challenges confronting Bangladesh’s economy, saying addressing these issues will be essential to revive private sector-led growth.

The concerns were highlighted at the launch of a Metropolitan Chamber of Commerce and Industry (MCCI) publication titled “Reviving private sector-led economic growth: critical issues and priorities facing the new government in Bangladesh”, organised by the MCCI and Policy Exchange Bangladesh in Dhaka today.

Macroeconomic stabilisation remains a central priority as the economy continues to grapple with elevated inflation, tightening credit conditions and persistent pressures in the external sector, they said.

Restoring price stability and strengthening external balances will be essential to rebuild investor confidence and support economic recovery.

Persistently low revenue mobilisation and rising external debt repayment obligations have constrained fiscal policy space. Strengthening fiscal management and expanding domestic revenue collection will be critical to financing development priorities while maintaining macroeconomic stability, according to the business leaders.

The banking sector continues to face serious governance challenges, including rising non-performing loans and weak capital adequacy. These vulnerabilities undermine efficient credit allocation, discourage investment and increase systemic financial risks.

Bangladesh’s export success has been largely driven by the ready-made garments sector, which accounts for the overwhelming majority of export earnings. This concentration creates structural vulnerability and underscores the urgency of export diversification, particularly in the post-LDC graduation environment.

Regulatory uncertainty, governance concerns and infrastructure constraints continue to discourage private investment. Foreign direct investment remains relatively low compared with peer economies, limiting the country’s ability to accelerate industrial diversification.

Energy supply shortages and rising fuel costs are undermining industrial productivity and export competitiveness. Ensuring reliable and affordable energy supply will be essential to support manufacturing expansion and sustain economic growth.

Skills mismatches continue to constrain labour productivity and limit the ability of industries to move into higher value-added sectors. Strengthening technical education, vocational training and industry-aligned skills development will be critical to improving competitiveness and generating quality employment.