Govt adopts medium-term strategy to address economic risks

Bangladesh’s economy has been under continuous pressure for over five years, facing multiple domestic and global challenges. Ahead of the national budget for FY2025–26, scheduled to be presented on 2 June 2025, the interim government has identified several key threats to the economy.

These include persistent inflation, slow economic activity, political uncertainty, and instability in global markets.

Following the fall of the authoritarian Awami League government on 5 August last year amid a massive student and public uprising, the economic crisis deepened.

However, the interim government’s reform initiatives have started yielding positive results. Still, the outbreak of war between Iran and Israel — now involving the United States — has introduced fresh global uncertainties.

Anticipating ripple effects across international food and fuel markets, the government has devised a medium-term strategy to cushion the impact.

According to the Ministry of Finance, challenges such as inflation control, food and energy security, employment generation, revenue mobilisation, and LDC graduation have all shaped the FY2025–26 policy priorities. The ministry is preparing a report assessing potential economic fallout from the prolonged Iran-Israel war, with mitigation strategies including boosting domestic production, reducing import dependence, increasing exports, and exercising fiscal restraint.

Adding to global volatility are the ongoing US-China tariff disputes, with the looming expiration of tariff exemptions threatening further contraction in global trade. Domestically, political uncertainty has discouraged both local and foreign investment. Many businesses have shut down, export-oriented industries are experiencing production cuts, and costs have surged in agriculture and other sectors.

Unemployment is rising. The latest Quarterly Labour Force Survey by the Bangladesh Bureau of Statistics (BBS) shows that the number of unemployed increased by over 300,000 in a year, reaching 2.73 million by December 2024.

Renowned economist Dr Zahid Hussain has recommended more realistic planning. Describing the proposed Tk 7.9 trillion budget as overly ambitious, he urged the government to scale it down and take pragmatic measures to resolve structural economic problems, especially in investment and job creation.

The FY2025–26 budget is set for approval by the Advisory Council on 22 June.