In-depth country-focused analysis on Bangladesh's economic, political and operational risk environment, complemented by detailed sector insight


Bangladesh is slowly emerging on the investment radar as a frontier market. It is expected to benefit from rising foreign investment, especially from India. In addition, the nascent domestic shipbuilding industry could emerge as a new growth driver. Bangladesh’s large youthful population and competitive labour cost structure make it a prime investment destination for businesses with labour-intensive operations, such as agriculture and manufacturing.

We keep our clients informed of the latest market moves and political developments in Bangladesh, as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on five of Bangladesh’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert research teams. We aim to keep you one step ahead, so you can do business with confidence in Bangladesh.

Bangladesh Country Risk

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Core Views

  • We expect Bangladesh's real GDP growth to remain steady at 7.1% in both FY2015/16 (July-June) and FY2016/17, increasing from 6.5% in FY2014/15. The slight improvement in Bangladesh's growth outlook is informed by a relatively more stable political backdrop, resilience in foreign-currency earnings, and strong government initiatives to develop supporting infrastructure. That said, fiscal weaknesses, a poor financial system, and a rise in domestic security threats could pose downside risks to Bangladesh's economic growth trajectory over the medium term.

  • Following BB's decision to leave its benchmark interest rates unchanged in July, we expect the central bank to hold interest rates steady again at its upcoming meeting in January due to rising core inflationary pressures and elevated credit growth. A constructive growth outlook...

Bangladesh Operational Risk Coverage (9)

Bangladesh Operational Risk

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BMI View: Bangladesh's large youth population and competitive labour cost structure are two key factors that make it a prime investment destination for businesses with labour-intensive operations such as agriculture and manufacturing. However, the country's overall attractiveness is weighed down by an underdeveloped transport sector and insecure operating environment, as well as severe barriers to trade and investment, notably a complicated fiscal regime, high levels of corruption and excessive red tape, which often lead to delays and unplanned expenses. Taking these factors into consideration, Bangladesh receives a score of 39.3 out of 100 in BMI's Operational Risk Index, ranking 26th out of 35 countries in the Asia region, between Tuvalu and the Solomon Islands.

Substantial Risks Present Despite Some Labour Market Advantages

Bangladesh Crime & Security

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BMI View: The threat of political unrest escalating to violent protest remains high and domestic terrorism is an ongoing concern. While interstate relationships between Bangladesh and its neighbours are improving, the country remains vulnerable to regional tensions relating to contested border areas and the activities of international terrorist groups. At the same time Bangladesh experiences a high rate of crime and businesses face significant additional costs to ensure the security of staff and property, as well as to combat the growing rate of cybercrime and financial crime. Due to these considerations, Bangladesh has an overall score of 30.2 out of 100 for Crime and Security Risk, placing the country an uncompetitive 30th out of 35 states in the Asia region and 165th out of 201 states on a global basis.


Bangladesh Labour Market

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BMI View: Inherent structural weaknesses in Bangladesh's labour market present businesses with some significant restrictions despite the large size of the labour market. The quality of education is poor and access is restricted, particularly in poorer rural areas. This contributes to low tertiary enrolment rates and a lack of skilled labour in the marketplace. Compounding these risks is a high level of unionisation, particularly prevalent in the readymade garment industry, though we do note that these risks are somewhat offset by low labour costs. As such, Bangladesh has an overall score of 53.9 out of 100 for Labour Market Risks, which places the country...

Bangladesh Logistics

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BMI View: Bangladesh's logistics profile presents substantial risks to investors. Domestic supply chains are inhibited by the country's poor-quality transport network with severe capacity limitations, leading to increased delays and heightened transit costs. In addition, the trading environment remains laden with excessive bureaucratic procedures which act as a major drag on firms operating in the export-dependent country. Businesses also face interruptions to supplies of key utilities, particularly...

Bangladesh Trade & Investment

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BMI View: Despite stable economic growth over two decades, Bangladesh has seen a rise in political instability as a result of a number of factors, including inter-party and ethno-religious tensions, which has negatively affected investment. Furthermore, the country suffers from high levels of corruption and weak enforcement of legislation, which combine to create an inhospitable investment environment. On the other hand, the financial market is relatively well-developed, and with international donor assistance Bangladesh has made great strides in poverty reduction in recent years. Bangladesh presents a high risk for Trade and Investment, sitting fourth place from the bottom of 29 Asian countries with a score of 25.8. It is positioned between Nepal and Laos, and seven places behind India.

The area with the lowest risk to...

Bangladesh Industry Coverage (8)

Bangladesh Agribusiness

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BMI View: We have made some forecast revisions to the Bangladeshi agricultural sector in this quarterly update. Nevertheless, we maintain our cautious outlook towards the agricultural sector over the short-term. The limited arable land available for acreage expansion, along with poor safety standards, will continue to constrain production growth over our current forecast period out to 2020. Logistical problems and structural concerns plague the agricultural industry, particularly the transportation of food within the country. Looking ahead, over the long-term, we believe that there is significant room for growth and improvement in subsectors such as grains and livestock. That said, as the agricultural sector in Bangladesh employs close to 50% of the working population but contributes under...

Bangladesh Autos

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BMI View: This quarter, we have adjusted our 2016 forecast for new vehicle sales to 16.1% (up from 11.5% previously). This reflects our view that commercial vehicle sales will perform more strongly over H216 against a backdrop of strong economic activity.

Passenger Car and Light Commercial Vehicle Sales
f = BMI forecast. Source: Bangladesh Road...

Bangladesh Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

Bangladesh Infrastructure

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BMI View: We remain positive on Bangladesh's construction sector over the long term as the government continues to make meaningful progress in improving the country's institutional and regulatory framework. However, we note that these reforms are coming from a low base, and rising security threats in the country pose downside risks to our construction growth forecast of 9.5% in 2016.

Latest Updates And Structural Trends

  • According to the World Bank, Bangladesh had the third highest level of private sector participation (between 2011-2015) in infrastructure investments (worth USD2.7bn) in energy, transport, water, and sanitation sectors among 56 countries that are eligible for support from the International Development Association (IDA). We...

Bangladesh Medical Devices

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BMI Industry View: We expect the Bangladeshi medical device market to achieve one of the fastest growth rates in the world, at 14.5% annually, to 2019. With little domestic production, the demand for imported goods continues to drive growth, and positive trade indicators confirm this view. This under-developed market has huge potential, but prospects will hinge upon maintaining political stability and economic growth.

Projected Medical Device Market, 2014-2019
Total (USDmn) Per Capita (USD) Total (Local Currency mn) ...

Bangladesh Pharmaceuticals & Healthcare

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BMI View: Bangladesh's pharmaceutical export trajectory will be positive. Due to the tough competitive domestic environment, local drugmakers have expanded successfully into frontier and emerging markets in pursuit of commercial opportunities. With this as a foundation, developed countries will be a source of future growth for the country's exports as leading firms such as Beximco Pharmaceutical and Square Pharmaceuticals foray into lucrative markets such as the US and EU.

Headline Expenditure Projections

  • Pharmaceuticals: BDT171.6bn (USD2.2bn) in 2015 to BDT190.9bn (USD2.4bn) in 2016; +11.3% in local currency terms and +8.9% in US dollar terms.

  • Healthcare: BDT419.1bn (USD5.4bn) in 2015 to BDT460.8bn (USD5.8bn) in 2016; +9.9% in local...

Bangladesh Power

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BMI View: Gas will remain the dominant source of energy for electricity generation in Bangladesh for much of the foreseeable future. However, if Bangladesh is to stop the acute gas shortages from crimping economic growth, the country will have to cut its over-reliance on gas-fired capacity and diversify the energy mix. The government outlined plans to ensure coal accounts for 50% of the energy mix by 2030 , but we remain unconvinced such plans will come to fruition as local opposition to the exploitation of Bangladesh's huge coal reserves has so far stymied the development of a domestic industry...

Bangladesh Telecommunications

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BMI View : The merger of Robi Axiata and AirTel Bangladesh will reinvigorate Bangladesh's saturated mobile market. Besides accelerating the rollout of 3G networks and services, it will stimulate further price competition and possibly lead to the withdrawal of the smallest and weakest players, whose assets would be better utilised by others. The main downside risk is that demand for wireline services will be depressed further, precluding the emergence of a national broadband network.

Operator Consolidation To Benefit 3G Rollout
Mobile Market Forecasts

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