No new investment reflects a bleak prospect for jobseekers

With major indicators showing stress in the economy, there is no good news in the investment flow too as investors now prefer to stay away from taking on new projects or expanding their existing capacity.

Apart from challenges such as high inflation, difficulties in import for the US dollar crisis, and rising bank interest rates.

This reflects a bleak prospect for job seekers and a lack of economic expansion, casting doubt over the government’s 7.5 percent GDP growth target for the current fiscal year.

The World Bank has revised Bangladesh’s growth forecast for fiscal 2023-24 to 5.6 per cent as the economy is expected to remain stressed throughout the year thanks to persistent inflation and external challenges.

Entrepreneurs said private investment flows usually remain subdued ahead of any general election.

This year, the economic challenges have made the situation worse.

The registration of investment proposals by local and foreign investors slumped 39 per cent year-on-year in the July-May period of the previous fiscal year.

BIDA data shows that during the July-May period of fiscal 2022-23, foreign and domestic investors placed proposals amounting to $9.4 billion in different sectors, down from $15.30 billion during the corresponding period of the previous year.

The lack of appetite for investment is also visible from the sharp decline in opening letters of credit (LCs) for importing capital machinery in fiscal 2022-23 and the downward trend continued this year too.

Data from Bangladesh Bank shows that LC opening to import capital machinery plunged 22 per cent year-on-year to $381.8 million during the July-August period of fiscal 2023-24.

Besides, the settlement of LCs slumped 35 per cent to $490 million in the first two months of the current fiscal compared to the same period a year ago.

The current geo-economic state induced by the Russia-Ukraine war triggered breaks in the global supply chain, energy price hikes, and high inflation.

These external factors have resulted in a decline in investment in Bangladesh.