Private sector credit growth in Bangladesh slumped to just 6.82% in February, marking the lowest level in 21 years, reflecting deepening concerns over political uncertainty and economic stagnation.
According to Bangladesh Bank data, the 6.82% growth recorded in February 2025 is the lowest since 2004, as per available records on the central bank’s website. The decline highlights ongoing challenges in the country’s banking and business sectors.
This marks the seventh consecutive month of falling private sector credit growth. Economists have warned that such prolonged slowdown signals a crisis of confidence among businesses and banks alike.
In January 2025, growth stood at 7.15%, while it was 7.28% in December, 7.66% in November, and 8.3% in October. Growth figures were also on a declining trend through September (9.2%), August (9.86%), and July (10.13%). The downward slide began in November 2022 but intensified following political instability around mid-2024.
Despite a target of 9.8% credit growth for the private sector by July 2025, set in Bangladesh Bank’s latest monetary policy, the actual figures remain significantly lower.
Former World Bank lead economist Dr. Zahid Hussain attributed the downturn to a combination of factors, most notably ongoing political uncertainty. “Until the political climate stabilizes, a recovery in loan demand is unlikely,” he noted. He also pointed out that certain banks—especially those recently restructured by the central bank—face restrictions on issuing large loans, limiting credit availability further.
Managing Director of Mutual Trust Bank, Syed Mahbubur Rahman, echoed similar concerns. “The current economic and political environment has kept credit demand subdued,” he said. He added that the recent imposition of U.S. tariffs on Bangladeshi goods could worsen the situation by undermining export-oriented businesses, further reducing the appetite for loans.
As of the end of February, the total outstanding private sector loans stood at Tk 16.84 trillion, compared to Tk 15.76 trillion in the same month a year earlier.
Liberty News’ economic correspondent states that the situation paints a cautious picture for Bangladesh’s financial outlook in the run-up to the next general elections, with businesses likely to remain on the sidelines unless major policy or political shifts take place.
LND/BG
