Bangladesh's economy is facing mounting pressure as persistent inflation, weak revenue mobilisation, sluggish development spending and declining investment expose deeper structural weaknesses, economists have warned, cautioning that recent fiscal performance reflects significant implementation gaps.
Revenue mobilisation grew by only 12.9 per cent during July-January of the 2025-26 fiscal year-far below the government's ambitious annual target of 34.5 per cent. To achieve the target, revenue collection would need to increase by an extraordinary 59.4 per cent during the remaining five months of the fiscal year from February to June, a prospect economists consider highly unlikely under current economic conditions.
"A revenue shortfall of around Tk 60,000 crore has already emerged," Dr Fahmida Khatun of CPD said. "At the same time, the implementation rate of the Annual Development Programme stood at only 20.3 per cent during July-January of FY2025-26, marking the lowest progress recorded in the past fifteen years."
Analysts say the slow pace of development spending reflects deeper administrative and planning shortcomings, which could delay key infrastructure projects and weaken economic momentum.
Inflation remains another major concern. Overall inflation rose to 9.13 per cent in February 2026, with food inflation at 9.30 per cent and non-food inflation at 9.01 per cent.
Price pressures are also intensifying in rural areas. Rural inflation climbed from 8.63 per cent in January to 9.21 per cent in February, indicating that rising living costs are increasingly affecting households beyond major urban centres.
Economists note that inflation in Bangladesh is currently driven largely by supply-side factors, including higher import costs, supply chain disruptions and rising energy prices. As a result, they argue that policy responses must address both supply and demand-side pressures.
To help rein in inflation, economists suggested that the central bank reduce government borrowing from the banking system while ensuring that public spending prioritises productive investment. At the same time, non-essential public expenditure should be curtailed to ease fiscal pressure.
One of the most worrying indicators highlighted at the discussion was the decline in private investment. According to CPD estimates, private investment has fallen to 22.03 per cent of GDP-the lowest level recorded in a decade.
Foreign direct investment (FDI) remains even weaker, hovering below 0.5 per cent of GDP, significantly lower than levels seen in many comparable emerging economies.
Economists say that improving the investment climate and generating employment opportunities must now become urgent national priorities. They recommended simplifying regulatory procedures and establishing an integrated digital one-stop service platform to streamline business registration, licensing, taxation and regulatory compliance.
According to the country's energy experts, energy security for Bangladesh has emerged as a major challenge as it remains heavily dependent on imported fossil fuels, particularly liquefied natural gas (LNG) and crude oil sourced largely from Middle Eastern suppliers. In this context, they argued that strengthening domestic energy security should become a key priority in the national budget for the 2026-27 fiscal year.
CPD's research paper recommended diversifying fuel import sources, accelerating domestic gas exploration and prioritising investment in electricity transmission and distribution systems rather than focusing solely on expanding generation capacity. The think tank also proposed establishing a dedicated Renewable Energy Subsidy Fund and reducing import duties on renewable energy components.
Currently, import duties reach as high as 58.6 per cent for solar panels and lithium-ion batteries, while duties on lead-acid batteries stand at 89.32 per cent. Economists say such high taxes significantly increase the cost of adopting clean energy technologies and discourage investment in renewable energy solutions.
Climate-related budget allocations were also examined during the discussion. The share of climate-related spending in the national budget declined slightly from 5.30 per cent to 5.22 per cent, while the allocation as a proportion of GDP fell from 0.75 per cent to 0.66 per cent.
Economists say this level of funding remains insufficient given Bangladesh's growing climate vulnerability and its long-term goal of generating 40 per cent of electricity from clean energy sources by 2041.
Against the backdrop of global economic uncertainty and domestic fiscal pressures, economists stressed that Bangladesh must strengthen economic resilience to withstand both internal vulnerabilities and external shocks in the coming years.
