The Economy the Next Government Inherits, and the Choices That Will Shape What Comes Next
Citation: Raihan, S. (2026). The Economy the Next Government Inherits, and the Choices That Will Shape What Comes Next. SANEM & Australian High Commission Policy Paper Series. SANEM Publications, Dhaka, Bangladesh.
This paper examines the economic conditions the next government in Bangladesh is likely to inherit and argues that stabilisation alone will not restore growth, confidence, and social cohesion. While recent improvements in foreign exchange reserves and import contraction may indicate a degree of short-term stability, underlying structural vulnerabilities are still in place. Growth is decelerating, inflation is sticky, the private sector is reluctant to invest, and chronic vulnerabilities in the financial system, public finances, and labour market are still weighing on performance. As the country prepares for graduation from the LDC status in 2026, these vulnerabilities take on a greater significance, reducing the room for policy slippage and exposing it to external shocks.
This paper develops a proactive policy agenda that goes beyond crisis control to promote purposeful growth. It emphasises the need for a more balanced macroeconomic strategy that controls inflation without choking investment, alongside realistic exchange rate management and stronger market governance. Reviving investment requires restoring predictability, improving law and order, and redesigning industrial policy to reward performance, diversification, and regional production ecosystems. The analysis highlights domestic resource mobilisation as a development priority and builds the case for solid tax reform and expenditure redeployment to finance health, education, and social protection.
Financial sector repair is recognised to be critical in opening the credit channels to productive firms, in particular SMEs, and job creation and skills development are articulated as explicit policy objectives rather than by-products of growth. The paper also emphasizes the need to maintain trade competitiveness post-LDC graduation, while actively reducing anti-export bias and integrating climate resilience and energy security into mainstream economic planning. It concludes that in broad terms the next government has a historic choice: between simply drifting along on stabilisation and implementing a rigorous, inclusive policy to unlock sustainable growth and shared prosperity.
