Staff reporter :
Private sector credit growth in Bangladesh dropped to 6.29 percent in September the weakest pace in four years, according to recently released Bangladesh Bank data. The deceleration has continued since early August 2024 as lending demand from businesses remains sluggish.
Economists say the slowdown reflects stagnation in new business ventures and subdued private investment. While improvements in foreign exchange reserves have offered some reassurance, lingering political uncertainty is causing foreign investors to remain cautious.
A senior Bangladesh Bank official expressed optimism for a rebound after national polls and the formation of a new government.
“Once the political situation stabilises and investment resumes, imports of capital machinery will pick up, boosting demand for bank loans and pushing credit growth upward,” the official said. The downturn is also visible in the decline in letters of credit (LCs) opened for capital machinery imports a key indicator of business expansion sentiment.
Business leaders, meanwhile, emphasise that an investor-friendly environment and lower borrowing costs are essential to revive private sector activity.
High lending rates, they argue, are discouraging businesses from accessing funds to expand.
“Reducing financing costs and improving the overall business climate are critical. Otherwise, private investment will struggle to recover, and credit growth will remain weak,” they added.
