Economy faces five major risks

Country’s economy is currently confronting multiple serious challenges. International sanctions, trade barriers and tighter investment restrictions are already affecting the country’s exports and investment climate. At the same time, persistent inflation, slowing economic growth and rising debt pressures are adding further strain.

Economists warn that these combined risks are weakening the foundations of the economy and stress the need for timely identification and policy responses to prevent the situation from worsening.

According to the World Economic Forum’s (WEF) latest Global Risk Assessment, the top two economic threats for Bangladesh this year are crime and illicit economic activities and geo-economic conflicts. These risks are not limited to diplomacy alone; they are already having negative effects on exports, foreign exchange reserves, employment and investment flows.

As powerful nations introduce new trade and investment barriers to protect their own interests, access to international markets is becoming increasingly difficult for emerging economies like Bangladesh—particularly given its heavy reliance on exports.

Dr. Fahmida Khatun, Executive Director of the Centre for Policy Dialogue (CPD), said that global political and economic tensions are now directly shaping Bangladesh’s economic future.

“We are facing five major risks that are affecting economic stability and development,” she said. “The Russia-Ukraine war, instability in the Middle East, strategic rivalry between the US and China, trade sanctions and global supply chain restructuring are all creating additional pressure on our imports, exports, energy security, inflation, remittances and investment.”

She added that the global economy is becoming increasingly fragmented, which disproportionately harms developing countries. “Internal reforms alone will not be enough. Bangladesh must adopt strategies aligned with changing geo-economic realities. Without caution and preparation, risks will intensify. Strengthening governance, curbing crime, implementing economic reforms and maintaining balanced foreign relations are now critical.”

WEF data also identifies inflation as the third major risk. Prolonged high inflation has raised living costs for ordinary citizens and increased production expenses across business and industry, although recent trends show only partial relief.

The fourth risk is economic slowdown, driven by fears of a global recession, stagnation in domestic investment and mounting pressure to repay foreign loans. Forecasts by international agencies also point to slower growth ahead.

The fifth and most alarming risk is the growing debt burden at government, corporate and household levels. A significant share of the national budget is now allocated to interest payments, limiting resources for development. Economists caution that if this trend continues, Bangladesh could fall into the so-called middle-income trap.

Experts note that these risks are deeply interconnected: illicit financial activities deter investment, geo-economic tensions shrink markets, while inflation and debt intensify economic hardship for citizens—together undermining overall economic stability.