Bangladesh experienced a dramatic 70.34% year-on-year drop in fresh Foreign Direct Investment (FDI) during the first quarter of 2026. The net equity inflows reached a mere $78.26 million, the lowest in four quarters. This significant downturn is attributed by economists to a combination of persistent structural weaknesses, prevailing macroeconomic risks, and the uncertainty surrounding the first-quarter election.
Further compounding the issue, repeated sovereign credit rating downgrades and a substantial increase in non-performing loans within the banking sector have eroded investor confidence. While overall FDI, including reinvested earnings and intra-company loans, also saw a decrease, a notable rise in reinvested earnings from existing foreign enterprises was observed. However, experts stress that sustainable investment growth hinges on fresh equity rather than retained profits.
Key deterrents identified include policy bottlenecks, an incompletely implemented automated one-stop service system, and the high cost of doing business. Despite being South Asia’s second-largest economy, Bangladesh now lags behind smaller African nations such as Ghana, Uganda, and the Democratic Republic of Congo in attracting external capital. These competitor nations have undertaken significant statutory reforms to enhance their investment climates.
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