GED warns of economic slowdown ahead of election
Businees Desk :
The General Economics Division (GED) of the Planning Commission has issued a cautious outlook on Bangladesh’s economy ahead of the national election, warning that the central bank’s ongoing contractionary monetary policy has severely affected private sector credit and investment.
In its October 2025 Economic Update and Outlook, the GED noted that while inflation has recently eased, the tight monetary stance has caused a sharp slowdown in lending and business investment, with private sector credit growth falling to 6.35 percent in August, the lowest level in 22 years. Economists fear this could limit economic activity and industrial growth in the coming months.
The report noted that rice prices have begun to decline due to government intervention, while the exchange rate has remained stable despite a slowdown in exports. Bank deposits have risen significantly, driven by administrative reforms, lower interest rates on savings certificates, and increased remittance inflows, yet private sector lending continues to plummet.
The GED suggested that election-related activities could temporarily boost investor confidence as candidates increase spending to engage voters.
However, uncertainty surrounding the polls continues to keep many businesses cautious. Former BIDS Director General and ex-Chief Economist of Bangladesh Bank, Dr MK Mujeri, said initial optimism about the February election has faded due to political disagreements over the July certificate issue.
Dr Mujeri added that once the election schedule is announced, candidates are likely to spend heavily, both legally and through unaccounted channels, to woo voters. While this could temporarily increase cash circulation and consumption, it may also fuel inflation, creating further hardship for the public.
The GED report attributed the decline in private sector lending to the Bangladesh Bank’s contractionary policy, which raises policy interest rates, prompting commercial banks to park funds with the central bank instead of offering loans to businesses.
Economists warn that with stagnant credit, declining investment, and unproductive election spending, the economy could face significant stress in the months leading up to the polls