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Published : 15 Jun 2026, 12:46 AM
Trillion-Dollar Tug-of-War
Grand vision: The new government aims to double the economy to $1 trillion by 2034, fueled by a massive Tk 9.38 trillion budget
Investment gap: Hitting the target requires boosting investment from 28 percent to 40 percent of GDP, a scale never seen in the nation's history
Banking bottleneck: With default loans at 36 percent, severe credit crunches and 16 percent interest rates are currently choking private investment
"Miracle" mandate: Experts warn that reaching these unprecedented targets amidst global and domestic shocks requires a miracle
The real report card: The budget's ultimate success hinges on curbing tax evasion, slashing default loans, and reviving private data
Finance Minister Amir Khosru Mahmud Chowdhury has unveiled an ambitious vision for Bangladesh: transforming a $501 billion economy into a $1 trillion one within eight years.
The target sits at the heart of the BNP government's first budget since returning to power after nearly two decades. It promises economic recovery, stronger investment, more jobs and the fulfilment of election pledges.
Yet beneath the optimism lies a question economists say remains unanswered: How will Bangladesh raise investment from around 28 percent of gross domestic product to 40 percent within five years?
For former Bangladesh Bank governor Ahsan H Mansur, investment is unquestionably the key to reviving an economy he says has fallen into a "hole". But the scale of the government's ambition leaves him sceptical.
"It is true that the finance minister has proposed a number of measures to increase investment. Bangladesh Bank has already announced a Tk 600 billion stimulus package," he told bdnews24.com.
"But the economy is currently in a fragile condition. It will take at least two to three years just to pull it back on track."
He pointed to a series of uncertainties beyond the government's control.
"Much will depend on global developments. There is no certainty over when instability in West Asia will end. We do not know whether another shock is coming. The domestic political situation is another major question."
Bangladesh has never recorded investment above 32 percent of GDP, he noted.
"When investment has never exceeded 32 percent of GDP, how will it rise from 28 percent to 40 percent within five years amid all these uncertainties? Without Aladdin's lamp [miracle solution], that is not possible."
The Trillion-Dollar Roadmap
The BNP government has proposed a Tk 9.38 trillion budget for the 2026-27 fiscal year, 19 percent larger than the revised budget for the outgoing year.
In his budget speech, Khosru said the plan was designed with the objective of turning Bangladesh into a $1 trillion economy by 2034.
According to provisional estimates from the Bangladesh Bureau of Statistics (BBS), the economy is currently worth about $501 billion.
Achieving the target would effectively require the economy to double in size within eight years.
Rather than setting a one-year investment target, the finance minister presented a five-year framework.
The government aims to raise real GDP growth to 8.5 percent by 2030-31, reduce inflation to 5 percent, increase foreign direct investment to 2.7 percent of GDP and lift total investment to 40 percent of GDP.
The budget is built around what Khosru calls the "Three-R" strategy -- Recovery, Rescue and Rebuild.
The approach emphasises deregulation, financial-sector reform, energy security, improved governance and a more investment-friendly business environment.
Analysts broadly agree these priorities are necessary. Their concern is whether they can be implemented.
Bangladesh has long struggled in global ease-of-doing-business rankings despite repeated promises of reform.
Proposals such as one-stop licensing services and regulatory simplification appear sensible on paper, but investors have heard similar commitments before.
The financial sector presents an even greater challenge.
Defaulted loans now account for roughly 36 percent of total outstanding bank credit. The government is spending more than Tk 400 billion this year to recapitalise troubled banks, while simultaneously planning to borrow Tk 1.12 trillion from the banking sector to finance the budget deficit.
Economists view this cycle as one of the economy's most persistent structural weaknesses.
Energy security is another pressure point. Subsidies in the sector have climbed to around Tk 1.2 trillion, consuming a significant share of public resources and limiting fiscal flexibility.
Business Leaders Urge Caution
Anwar-Ul-Alam Chowdhury Parvez, president of the Bangladesh Chamber, believes the government deserves time but warns against unrealistic expectations.
"The interim government left the economy at rock bottom after a year and a half. Investment was almost absent and economic activity had stagnated," he said.
"We need to give the new government some time to show how much it can recover through this budget. The finance minister himself has said the country will need to endure two difficult years."
Parvez does not expect a major investment surge during that period.
"I think investment growth will remain limited over the next two years. The priority should be bringing the economy back onto the right track. Investment will follow later."
He identified energy shortages, high lending rates, rising default loans and a loss of confidence in the banking system as major barriers to industrialisation.
"Who will invest by borrowing at 16 percent interest?" he asked.
"No one is doing so. That is why private-sector credit growth has fallen to a record low of 4.75 percent. Growth in productive industries has weakened, imports of capital machinery have slowed and working-capital flows show negative trends."
Without investment, he argued, factories will not be built, jobs will not be created and foreign investors will remain reluctant.
What the Numbers Show
Official data underline the challenge.
BBS estimates suggest GDP growth in 2025-26 may rise modestly to 4.14 percent, up from 3.49 percent in the previous fiscal year.
The economy's size has increased from $456 billion to $501 billion. Yet investment performance has weakened.
Total investment in the outgoing fiscal year stood at Tk 17.09 trillion, equivalent to 27.93 percent of GDP -- the lowest ratio in 11 years.
Even during the COVID-19 pandemic, investment as a share of GDP was higher.
Private investment accounted for 21.53 percent of GDP, while public investment stood at 6.4 percent.
Foreign investment trends are also mixed. Bangladesh received net FDI of $1.14 billion during July-April of the outgoing fiscal year, down more than 20 percent from $1.43 billion during the same period a year earlier.
Development spending remains sluggish as well. During the first 10 months of the fiscal year, implementation of the Annual Development Programme reached only 41.41 percent.
For Mansur, these indicators will provide the real test of the budget's success.
"How effectively technology is used to curb tax evasion, how much defaulted loans are reduced and how far private investment recovers — these three indicators will be the real report card of this budget," he said.
"Whether the government succeeds or fails in that test will determine the future direction of Bangladesh's economy."
