Annual ICCB meeting highlights potential financial dangers, advocates for improvements
Bangladesh Faces Economic Challenges, Council Warns
The International Chamber of Commerce, Bangladesh (ICCB) has raised concerns about the economic challenges facing the country in the coming years, as highlighted at their 30th Annual Council held in Dhaka on July 26, 2024.
The World Bank projects GDP growth in Bangladesh to slow to 3.3% in fiscal year 2024-25, with similar forecasts of around 3.8-3.9% by the IMF and ADB. This represents a significant economic slowdown.
Inflation rates in Bangladesh are elevated, exceeding 10% overall and 14% for food prices. This economic pressure on consumers and businesses is a cause for concern.
Non-performing loans (NPLs) have reached a record Tk 3.45 trillion by December 2024, particularly burdening state-owned banks. Capital shortfalls totaling Tk 1.71 trillion have prompted reforms such as dissolving boards, bank mergers, and stronger oversight measures to stabilize the sector.
The ICCB emphasized the urgent need for a transition strategy to safeguard export competitiveness and maintain foreign investment flow, as Bangladesh’s planned graduation from Least Developed Country status by November 2026 may lead to the loss of preferential trade terms, especially impacting the Ready-Made Garment (RMG) sector. This could expose Bangladesh to tariffs as high as 11.5% in major markets like the EU and UK.
Global economic and geopolitical risks also pose a threat to Bangladesh. Ongoing geopolitical tensions, including conflicts in Ukraine and the Middle East, U.S.-China trade disputes, and a resurgence of economic nationalism, threaten Bangladesh’s supply chains and economic stability.
Investment is waning amidst political uncertainty, further deepening the economic slowdown. The ICCB called for strategic adaptation through financial sector reforms, trade transition planning, and policies to maintain growth momentum amid global volatility.
The Council also highlighted the urgency for addressing the climate crisis, which poses long-term threats to Bangladesh's economic resilience. Floods, droughts, and salinity could potentially shrink GDP by up to 2% annually.
To mitigate these challenges, the ICCC urged the government to formulate a transition strategy to maintain export momentum and retain foreign investment post-LDC graduation, recommending prioritising pharmaceuticals, agro-processing, and ICT. The Council also suggested forming a task force under the Commerce Ministry to negotiate favourable trade terms with the US.
Overhauling the National Board of Revenue is seen as key to strengthening revenue streams and public investment capacity in Bangladesh. The auditor for 2025 was appointed at the Council, and diplomats from Brunei, Myanmar, Argentina, and officials from the Asian Development Bank attended the event as special guests.
President Mahbubur Rahman outlined pressing global and national economic challenges ahead of 2025 at the ICCC meeting. The Council expressed concern over the persistently low tax-to-GDP ratio in Bangladesh, which hovers below 10%. Bangladesh's vulnerability in energy security was also discussed, with a focus on domestic exploration and increased investment in renewable sources.
Export diversification and FDI remain weak in Bangladesh, with the country attracting only $3 billion in FDI in 2023. The ICCC warned that proposed US tariffs of 35% on Bangladeshi goods could severely harm job creation.
The Council's warnings come as global economic growth is projected at 2.8% in 2025. The ICCC urged the government to adapt strategically to these complex internal and external challenges to ensure Bangladesh's economic stability and growth.
In light of the concerns raised by the International Chamber of Commerce, Bangladesh (ICCB), there is a pressing need for financial sector reforms to address rising non-performing loans and maintain export competitiveness in the business sector. The slowdown in the economy, as projected by the World Bank, IMF, and ADB, combined with elevated inflation rates, poses a significant challenge to both consumers and businesses in Bangladesh.
