Bangladesh, long affected by political instability and recurring anti-India protests, has now scored a damaging “own goal”. The street agitations aimed at targeting India have ended up inflicting severe harm on Bangladesh’s own economy. What began as political mobilisation has rapidly escalated into an economic self-inflicted wound.
The country’s trade and industrial sectors have virtually come to a standstill. The garment industry, Bangladesh’s largest employer, principal export earner, and the backbone of its economy, is facing an unprecedented crisis. Finished textile products are piling up in factories, unable to reach international markets due to disruptions in production, transport, and port operations. For years, garment exports powered Bangladesh’s economic growth, helping it achieve an average GDP growth rate of 6–7 per cent in recent financial years. However, the current turmoil has reversed those gains. As Bangladesh sought to provoke India through sustained protests, the economic fallout has begun to benefit Indian garment exporters, who are now gaining orders diverted away from Bangladesh. At the same time, foreign investment flows into Bangladesh have slowed sharply, with investors adopting a wait-and-watch approach amid mounting instability.
Relations with India, a key partner since Bangladesh’s independence, have also deteriorated. Citing security concerns, India has closed visa application centres in Bangladesh, further disrupting travel, trade, and people-to-people engagement at a time when stability is already fragile.
Setback in the garment sector
Bangladesh is the world’s second-largest producer of ready-made garments. According to the Bangladesh Investment Authority, the sector earned $38.48 billion (approximately ₹3.4 lakh crore) in export revenue last year. That vital engine is now sputtering. Major garment factories in industrial hubs such as Gazipur, Savar, and Narayanganj have been shut down following violent unrest.
Factory owners say closures were unavoidable due to escalating security threats. In other regions, factories are operating at reduced capacity as a precaution. The situation has been compounded by transport disruptions as petrol pumps and logistics companies outside Dhaka are reluctant to operate at night, severely affecting the movement of goods. As a result, even garments that have been manufactured are struggling to reach ports for export.
Trade paralysis and investor anxiety
The crisis extends beyond garments. Exports of leather goods and plastic products manufactured by small and medium enterprises have also stalled. Port uncertainty, labour shortages, and disrupted supply chains have created bottlenecks that traders say are difficult to overcome in the current climate.
Adding to these pressures, India recently withdrew permission for the transshipment of goods transported overland through Indian ports. Bangladeshi traders fear that prolonged disruptions could lead international buyers to cancel orders altogether. There is growing concern that Bangladesh’s reputation as a reliable manufacturing and export destination has suffered lasting damage. Across the country, shopping malls and business centres are closing earlier than usual following warnings of increased night-time violence. Businesses that rely on evening operations, restaurants, retail outlets, and transport services, have seen a sharp decline in activity, further weakening domestic demand.
A worsening macroeconomic picture
Bangladesh’s economy had already taken a major hit last year due to political unrest. The International Monetary Fund has now revised its GDP growth forecast for the current fiscal year down to 4.9 per cent, well below earlier expectations. The World Bank has issued an even more pessimistic outlook, estimating growth could fall to 3.3 per cent, potentially the lowest rate recorded in 36 years.
Although inflation, which surged into double digits, has shown signs of easing, price pressures remain high and continue to strain households. Hopes of securing foreign loans to stabilise the economy have dimmed. Reports indicate that banks are increasingly reluctant to lend, while businesses are hesitant to borrow due to elevated interest rates. This credit squeeze is choking industrial activity at a critical moment. Rising public debt adds another layer of concern. A decade ago, Bangladesh’s debt-to-GDP ratio stood at 27 per cent. By the 2023–24 financial year, it had climbed to 37.62 per cent. The IMF projects it will rise further to 40.3 per cent this year, intensifying fiscal stress.
Amid this economic turmoil, the interim government led by Muhammad Yunus has announced that general elections will be held on February 12 following the recent political crisis. However, uncertainty looms large over whether the elections can be conducted smoothly under the current conditions. As economic pressure mounts and political tensions persist, the nation watches anxiously to see what course Bangladesh will take next.
