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Updated Oct 26, 2026 · 18:12
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Business World News Updated Oct 26, 2026

Report flags four economic traps keeping Bangladesh poor

A new report from Bangladesh-based The Financial Express says Bangladesh's economy is held back by four interconnected traps: political confrontation, corruption, extortion and capital flight. The report notes that isolated reforms fail because these traps reinforce one another, citing a 33.2 per cent non-performing loan ratio and foreign investment at just 0.3 per cent of GDP. It also points to Transparency International Bangladesh's estimate that private buses pay nearly Tk 10.59 billion a year in extortion.

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Four institutional economic traps keep Bangladesh mired in persistent poverty

New Delhi, Oct 26

Bangladesh's economy remains constrained by four interconnected "traps" comprising political confrontation, corruption, extortion and capital flight, which collectively generate a fifth trap of persistent poverty, a new report has said.

The report from Bangladesh-based The Financial Express pointed out that isolated reforms fail to produce lasting results because these "traps" are interconnected.

"Recapitalising troubled banks without confronting politically connected lending may restore liquidity without accountability," the report said.

Regarding the first trap, the report said political confrontation creates uncertainty, disrupts business activity and weakens institutions, providing conditions for other "traps" to flourish.

Corruption flourishes as a nexus between politicians and bureaucrats, which distorts the allocation of credit, contracts and licences, allowing politically connected actors to benefit while productive sectors struggle to secure financing.

Extortion raises production and distribution expenses acting as an unofficial cost on businesses and informal workers, with the burden ultimately passed on to consumers and low-income households.

The publication mentioned an estimate from Transparency International Bangladesh (TIB) that private buses and minibuses pay nearly Tk 10.59 billion annually in extortion.

"During the hartals and blockades of late October to November 2023, the president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) put the economy's losses at Tk 65 billion per day," the report noted.

Consequently, capital flight removes resources that could otherwise finance domestic investment and job creation and is also the exit route for wealth created by illegal means.

The World Bank found net foreign direct investment (FDI) in FY26 fell 15 per cent to about $1.5 billion, only 0.3 per cent of GDP.

The report noted that a banking system with a 33.2 per cent non-performing loans (NPL) ratio, exceptionally weak private-sector credit growth, and foreign investment of just 0.3 per cent of GDP provides insufficient room for sustained employment expansion.

— IANS

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Reader’s Guide · AI-assisted, based only on the report above

What the report makes clear: The report lays out four named structural traps and ties them to specific figures on bad loans, extortion costs and falling foreign investment.

Still open: The report does not yet say what specific reforms the authors propose, or how these traps might be sequenced or prioritised for action.

Another way to look at it: Naming political confrontation as a trap raises the question of who can realistically dismantle it, since the actors who would need to act are often the ones benefiting from the status quo.

Which of these four traps do you think is hardest to break, and why?

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