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LightCastle’s flagship publication, the Business Confidence Index (BCI), captures the outlook of private sector leaders from multinationals, local conglomerates, startups, and SMEs across key industries in Bangladesh. For business leaders, investors, and policymakers, the report offers a snapshot of both macroeconomic and sector-specific conditions over the past six months, while also reflecting industry leaders’ expectations for the next six months.
The BCI score is derived using the Harmonized Expectation Indicator, which calculates the geometric average of current conditions and future expectations. The sentiment of respondents is quantified on a scale ranging from –100 to +100, where a positive score indicates optimism about future performance relative to the present.
In doing so, the study
The 2024-25 BCI report captures the perspectives of 140 prominent industry leaders across more than 25 sectors in Bangladesh, encompassing multinational corporations, local conglomerates, start-ups, and SMEs. The findings indicate a cautiously optimistic sentiment within the private sector, stakeholders express confidence in the potential for long-term structural reforms, yet remain uncertain about short-term economic recovery due to prevailing macroeconomic challenges and ongoing political transition.
Bangladesh’s private sector has exhibited a positive outlook with a cumulative business sentiment score of +6.44. Notably, local SMEs and startups have performed better than local conglomerates and MNCs. This disparity in scores is largely attributed to external factors, as larger organizations have been more affected by geopolitical instability, supply chain disruptions, global commodity price changes, and international trade policies.
Only 17% of respondents indicated that industrial performance was favorable over the past six months. In the first quarter of FY25, both the agriculture and industrial sectors experienced weakened growth, contributing to a broader slowdown in economic activity.
Widespread challenges—including currency depreciation, import restrictions, higher energy prices, and persistent inflation—have adversely impacted nearly all industries to varying degrees. Looking ahead, 76% of respondents anticipate a recovery in industrial performance, driven by a gradual increase in consumer demand and sales alongside easing inflationary pressures.
Within the primary sector, poultry and livestock recorded the highest BCI score (+14.2), followed by aquaculture, reflecting confidence among stakeholders. Within the manufacturing sector, the pharmaceuticals industry exhibited the highest level of confidence with a score of +21.1, whereas the construction and real estate sectors recorded the lowest confidence at -31.1.
In the services sector, the IT/ITeS industry demonstrated the highest level of confidence (+26.7), primarily driven by an expanding pool of freelancers, tech startups, and increased digital adoption. In contrast, the financial sector recorded the lowest confidence, attributed to governance challenges, regulatory capture and elevated levels of non-performing loans (NPLs).
Over the past six months (July’24-Dec’24), a majority of respondents have expressed concern regarding the national economy, pointing to persistent challenges such as elevated inflation, structural weaknesses in the financial sector, subdued private and public investment, and not to mention, political unrest. Furthermore, key reforms recommended by various commissions and committees have yet to be implemented, while the law-and-order situation remained somewhat unstable.
Despite these challenges, around 75% of respondents remain optimistic that the economy will not deteriorate further in the near term. This cautious optimism is supported by notable improvements in remittance inflows, a recovery in foreign exchange reserves, and strengthened export performance. Moreover, interest and exchange rates have become more market-driven compared to previous years.
While vulnerabilities within the banking sector persist, targeted interventions by the Central Bank—such as liquidity support—have helped stabilize weaker institutions. However, political uncertainty persists despite the formal announcement of national elections scheduled to take place between December 2025 and June 2026.
Businesses have been found navigating a tough environment driven by input cost pressures, limited investment, expensive financing, sluggish demand, and political instability. Rising raw material and energy costs have squeezed margins across sectors, while high interest rates have made borrowing prohibitively expensive for many firms. Uncertainty in the political landscape has further dampened investor confidence and delayed decision-making. At the same time, weak consumer sentiment has led to lower demand, particularly in discretionary sectors, compounding challenges for businesses trying to sustain growth and profitability.
Industry leaders were asked to identify sectors with the highest growth potential in the next 10 years. Most widely chosen was agri and agro-processing. Backed by a huge workforce and an annual production of 70 million tons, with agro-processed exports growing at 16.6% per year, respondents noted immense potential in this sector. Rising incomes, urbanization, and a shift toward frozen and ready-to-cook foods are fueling domestic demand, supported by a sizable internal market of over 170 million people and access to regional export markets.
IT and IT-enabled services came in next, with a booming workforce of over 350,000 professionals generating $1.5 billion in export earnings annually. Pharmaceuticals follow, having already met 98% of domestic demand and exporting to over 151 destinations, aided by favorable tax exemptions and incentives. Lastly, the apparel and textile sector, Bangladesh’s traditional strength, continues to hold promise. With opportunities to pivot toward MMF-based apparel, sustainable practices, and recycled fabric systems.
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