ADB sees a $1 trillion future. Can Bangladesh win investors’ confidence?
The Asian Development Bank says Bangladesh can become a US$1 trillion economy by 2034, but says deeper reforms, stronger private investment, reliable energy and regional connectivity will be needed.
In a Nutshell:
- ADB Vice President Yingming Yang said Bangladesh has the potential to become an upper middle income country and a US$1 trillion economy by 2034, using its location between South and Southeast Asia to expand trade, logistics, energy and digital links.
- The BNP government says its Tk9.38 trillion FY2026-27 budget targets 6.5% growth and puts the 3R strategy, Recovery and Stabilisation, Restoration, and Reconstruction for Acceleration, at the centre of its US$1 trillion plan.
- Bangladesh Bank has also launched Tk19,000 crore in refinancing programmes for CMSMEs, export diversification, agriculture and green industries, aimed at expanding private investment and reducing reliance on garments.
- Bangladesh Bank has meanwhile exempted S Alam Group owned SS Power 1 from a banking restriction, allowing Rupali Bank to open import LCs with a 100% cash margin until December 2027, while S Alam faces major loan recovery and asset recovery proceedings.
- The government is presenting its first six months as the start of that economic recovery, even as the banking system continues to raise questions about whether Bangladesh is creating the confidence investors need.
Context
The BNP government has made a US$1 trillion economy by 2034 part of its 3R strategy, while ADB says reaching that goal will require deeper reforms, stronger private investment, reliable energy, export diversification and regional connectivity. But banking sector problems, including high defaulted loans and concerns over regulatory capture, still remain a major test of investor confidence. Among other factors such as political instability, unclear policies, tax procedures, electricity infrastructure and weaknesses in the legal system, foreign companies have continuously flagged this as a concern.
Why it matters
ADB expects growth of only 3.7% in FY2026 and 4.5% in FY2027, leaving a significant gap with the government's 6.5% target and showing how much acceleration the trillion dollar ambition requires. Bangladesh also needs to turn its geographical advantage into investable infrastructure, with ADB pointing to reliable and affordable energy, better logistics, workforce skills and stronger financial discipline, while LNG dependence and weak electricity reliability remain risks for long term industrial investment. Foreign investors have identified political and social instability, tax procedures, unclear policy, electricity infrastructure and legal weaknesses as investment concerns, making institutional credibility as important as Bangladesh's market size or location.
What we think
The government cannot build investor confidence through new financing programmes while allowing uncertainty over who can access the banking system to persist. The recent decision to allow an S Alam linked power plant to open import LCs despite the group's major loan defaults is one example of what Bangladesh should not do if they want to retain investor confidence. The SS Power exception may protect Rupali Bank through its cash margin, but Bangladesh Bank should strictly establish the source of that money, prevent the facility from bypassing existing recovery claims, and apply clear criteria equally to other default linked companies. If Bangladesh wants the private and foreign capital needed for 6.5% growth and a US$1 trillion economy, banking discipline has to become a visible part of the economic reset, not an unresolved contradiction.