Private sector credit growth in Bangladesh hit a decade-low of 7.15% in January 2025, the lowest since at least 2015. This growth was significantly below the Bangladesh Bank’s target of 9.80% for the second half of the fiscal year. Economists and bankers attribute the slowdown to the central bank’s tight monetary stance, high lending rates, and economic uncertainty following political changes. The policy rate remained at 10% to combat inflation, which made borrowing more expensive. Additionally, the political climate and disruptions in loan recovery, especially among large borrowers, contributed to reduced credit demand. Capital machinery imports also saw a sharp decline, with LC opening dropping by 33.68% and settlements by 27.33%. Experts predict subdued private sector credit demand until after the elections, as investors remain hesitant due to the political instability and high lending rates.
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