Net foreign direct investment inflow in Bangladesh declined by 8.8%, falling from $1.61 billion in FY23 to $1.47 billion in FY24, as per recent Bangladesh Bank data. This $142 million drop is attributed to difficulties in repatriating earnings, foreign exchange volatility, and overall economic uncertainty. Additionally, outstanding FDI from the USA decreased by $2.92 billion over six months.
Standard Chartered Bank Bangladesh CEO, Naser Ezaz Bijoy, pointed to three primary factors: political uncertainties ahead of the 2024 general election, economic instability including currency devaluation, and Bangladesh’s recent credit rating downgrades, which dampen investor confidence. Notably, S&P Global and Moody’s downgraded the country’s ratings due to weakened liquidity and political risks, which economists warn could further reduce FDI.
The dollar exchange rate, impacted by lower FDI, rose 10.7% to Tk121 in June 2024. Approximately 42% of FY24’s FDI was from reinvested earnings, largely because of the attractive return on investments in Bangladesh and challenges in earnings repatriation. Key investment sectors included textiles ($436 million) and banking ($230 million), with additional investments in pharmaceuticals, chemicals, power, and food industries.
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