Bangladesh net FDI rises 29.3pc in Q2, rebounds after political unrest hit Q1

Economist Zahid Hussain says the overall trend appears to be improving, but it’s still unclear whether investor confidence has actually increased

Bangladesh’s net foreign direct investment (FDI) has bounced back in the second quarter of the current financial year, rising more than 29.3 percent from a year earlier.

There was a major drop in the first quarter amid political unrest.

According to updated data released by Bangladesh Bank on Sunday, net FDI stood at $490.4 million in the October–December quarter.

Total inflows during the quarter reached $1.162 billion, while foreign investors repatriated $671.6 million in the same period.

The United Kingdom was the largest source of FDI during the quarter, investing $150.1 million in Bangladesh.

In contrast, net FDI in the July–September quarter had dropped 71 percent year-on-year, reaching just $104.3 million, compared with $360.5 million in the same period of the previous fiscal year.

The sharp decline followed political unrest during the anti-government protests in July and August.

In the same quarter (October–December) of FY 2023-24, foreign investors had brought in a total of $1.143 billion and repatriated $764.2 million, resulting in a net FDI of $379.2 million.

Bangladesh Bank data shows that net FDI in the previous fiscal year (FY 2023-24) was $1.41 billion.

The figures for earlier years were $1.6 billion in FY 2022-23, $1.71 billion in FY 2021-22, $1.32 billion in FY 2020-21, and $1.2 billion in FY 2019-20.

The stock of foreign investment – the total amount held by foreign investors – rose to $18.29 billion at the end of December, up 2.58 percent from $17.83 billion in the same period a year ago.

Zahid Hussain, former lead economist at the World Bank’s Dhaka office, told bdnews24.com: “There has been progress in all three indicators of FDI. Overall, it looks like an improvement. But whether investor confidence has actually improved is difficult to say.”

Bangladesh Bank has been publishing foreign investment statistics since 2014.