[🇧🇩] Monitoring Bangladesh's Economy

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How can we navigate a fragmented global geo-economic order?

The 81st session of the United Nations General Assembly (UNGA) began on September 8 amid profound geopolitical and geo-economic uncertainties.

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How can we navigate a fragmented global geo-economic order?

Fahmida Khatun

FILE VISUAL: SALMAN SAKIB SHAHRYAR

The 81st session of the United Nations General Assembly (UNGA) began on September 8 amid profound geopolitical and geo-economic uncertainties.

Global challenges, including wars, strategic rivalry, tariffs, technological competition, energy insecurity, climate-related trade measures and restructuring of global supply chains, will feature prominently in the UNGA session discussions. The outcomes of the discussions are particularly significant for Bangladesh because global events now directly affect Bangladeshi households even though they are happening thousands of kilometres away. Conflict in the Middle East can raise energy and food prices; US-China tensions can affect trade, technology and investment; instability in Myanmar can create humanitarian and security pressures; and changing US and European trade policies can alter market access for Bangladeshi exporters. Geopolitics can no longer be separated from economics, and geo-economics has become closely linked to national economic security.

The world is now shifting from globalisation through economic efficiency—in which firms prioritised the cheapest production and sourcing locations—to geo-economics. Today, governments and businesses are more attuned to factors such as suppliers’ political reliability, supply chains’ vulnerability to conflict or sanctions, the national-security relevance of technologies, and the strategic risks of dependence on specific countries. The global trading system is experiencing its most serious and sustained period of disruption since the multilateral framework was established 80 years ago.

Trade, investment, finance, technology, energy, and supply chains are increasingly used as tools for strategic policy. Dividing the multilateral trading system into geopolitically aligned blocs could lead to a long-term decline of 5.1 percent in global GDP and 18.6 percent in global exports. This trend is particularly worrying for smaller economies like Bangladesh, which have less bargaining power in bilateral negotiations.

For instance, the US and China are both important economic partners for Bangladesh, although the nature and depth of these relationships differ. The US is a key destination for our exports and an important partner in investment, technology and development cooperation. Meanwhile, China remains the country’s largest source of imports and a major supplier of industrial inputs, machinery and infrastructure investment. In FY2023-24, China accounted for 26.4 percent of Bangladesh’s import payments, while India accounted for 14.3 percent. The EU, too, has been Bangladesh’s major trading partner and a large market, especially for its readymade garments (RMG) under its Everything but Arms (EBA) initiative. While Bangladesh needs constructive, mutually beneficial relations with all countries guided by its own economic and development priorities, greater diversification of export markets, sources of investment, technology, and critical imports would reduce vulnerabilities and give it greater flexibility in navigating an increasingly complex geopolitical environment, such as the Middle East crisis.

It illustrates how geopolitical developments can directly affect Bangladesh’s domestic economy, which depends largely on imported energy and has extensive labour-market and remittance links with Gulf economies. In FY2025-26, Bangladesh is projected to receive approximately $5.85 billion in remittances from Saudi Arabia, $4.58 billion from the UAE, $2.05 billion from Oman and $1.56 billion from Qatar. Meanwhile, from March to June 2026, LNG loadings from Qatar and the UAE dropped by approximately 35 billion cubic metres year-over-year due to disruptions related to the Middle East crisis.

A prolonged conflict could affect Bangladesh’s economy by increasing inflation, reducing fiscal space through higher energy subsidies, raising import costs and weakening exports and remittances. Energy security should therefore be an essential component of economic security, calling for a mix of suppliers and contracts in the near term, alongside increased domestic gas exploration, renewable energy sources, energy efficiency measures, regional electricity trade, and investment in transmission infrastructure in the medium term to reduce our heavy dependence on energy imports.

The pandemic, the Russia-Ukraine conflict, Middle East instability, and the intensifying US-China strategic competition have highlighted the dangers of highly concentrated global supply chains. Disruptions in production, shipping, energy resources, and essential inputs have led multinational companies to focus more on resilience and security, alongside cost and efficiency. Consequently, many firms are adopting “China+1” strategies by maintaining operations in China and establishing additional production sites elsewhere. Simultaneously, they are spreading supply chains across countries and regions to reduce single-source reliance and adopting “friend-shoring”—setting up key activities in politically stable countries—and “de-risking” to reduce over-dependence on certain markets, suppliers, or technologies without completely withdrawing.

These developments are gradually reshaping global trade and investment patterns, creating new opportunities and competitive challenges for emerging economies such as Bangladesh. But benefits won’t come automatically. Global FDI rose by 6 percent to $1.6 trillion in 2025, but more than 80 percent went to the top 20 destination economies.

Meanwhile, technology and climate have become strategic economic issues, turning semiconductors, AI, cloud infrastructure, data, batteries, telecommunications and critical minerals into strategic economic assets. Bangladesh cannot compete at the technological frontier in every area, but it must build capabilities in feasible fields such as chip design, testing and packaging, AI skills, cybersecurity, data governance and trusted digital infrastructure by integrating technology with industrial, trade and economic-security policies.

Regarding climate, the EU’s Carbon Border Adjustment Mechanism (CBAM), which entered its definitive regime on January 1, currently covers selected goods in cement, iron and steel, aluminium, fertilisers, electricity and hydrogen, but not primarily Bangladesh’s RMG sector yet. However, complacency is unwarranted. Factors like carbon footprints, renewable energy adoption, water management, circular production, traceability, and environmental standards will increasingly impact competitiveness. Therefore, RMG’s green transition must be viewed as a strategic move, not just an environmental requirement.

These changes align with Bangladesh’s planned graduation from the UN Least Developed Country (LDC) status on November 24, 2026, pending approval of our preparatory period extension request. The UN Committee for Development Policy determined that the UNGA should consider granting this extension if Bangladesh makes notable progress in tackling ongoing structural vulnerabilities.

Irrespective of the outcome, Bangladesh must prepare for stricter rules of origin, labour and environmental standards, intellectual property requirements, and competitive markets by diversifying exports, boosting productivity, negotiating trade agreements, and upgrading technology. Our geo-economic strategy should focus on enhancing the ability to make independent decisions amid global uncertainties through proactive policymaking, stronger institutions, effective economic diplomacy, and a resilient domestic economy. External collaborations should align with the country’s development goals—sustained economic resilience, job creation, prosperity, and higher living standards for its citizens—rather than geopolitical interests.

Dr Fahmida Khatun is an economist and distinguished fellow at the Centre for Policy Dialogue (CPD).​

 

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Bangladesh's untapped halal economy

Bangladesh is approaching an economic transition in which many of the assumptions that supported its earlier development model will no longer be sufficient. Graduation from Least Developed Country (LDC) status will gradually reduce some of the preferential trade advantages that have supported expor

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Bangladesh's untapped halal economy

Bangladesh is approaching an economic transition in which many of the assumptions that supported its earlier development model will no longer be sufficient. Graduation from Least Developed Country (LDC) status will gradually reduce some of the preferential trade advantages that have supported export expansion for decades, while global markets are becoming more protectionist, technologically demanding and increasingly governed by standards, traceability and reputation. For Bangladesh, therefore, the challenge is no longer simply to export more. It is to export differently.

The ready-made garment (RMG) industry will remain the backbone of the economy for years to come, and its contribution to employment, foreign exchange earnings and industrialisation is beyond dispute. But an economy aspiring to upper-middle-income status cannot indefinitely depend on a narrow export base or compete primarily through low labour costs. The search for new engines of growth is consequently no longer a matter of policy preference; it is a strategic necessity.

In this context, Commerce Minister Khandaker Abdul Muqtadir’s recent call to prioritise the halal economy deserves to be taken seriously—not as a religious slogan, but as a proposition for industrial diversification and export strategy. The modern halal economy extends far beyond food and beverages. It encompasses pharmaceuticals, cosmetics, fashion, logistics, tourism, finance and an expanding range of technology-enabled services. More importantly, it sits at the intersection of several powerful global trends: the growth of Muslim consumer markets, rising concern about food safety and traceability, increasing demand for ethical production, and the growing commercial importance of certification-based trade.

For Bangladesh, this presents a rare convergence of demographic strength, industrial capacity and market opportunity. Yet opportunity alone does not create economic success. The uncomfortable reality is that Bangladesh possesses many of the ingredients required to become a significant player in the global halal economy but has yet to build the institutional architecture necessary to convert potential into performance.

The Paradox of Potential: Bangladesh is home to one of the world’s largest Muslim populations and possesses a substantial agricultural base, an expanding food-processing industry, internationally competitive garment manufacturing and a pharmaceutical sector with growing technological capability. Its domestic market for halal products is enormous. Yet Bangladesh remains a relatively modest player in global halal trade. This is the central paradox: the country is a major consumer of halal products but has not become a significant exporter of halal-certified, value-added goods.

Herein lies the uncomfortable paradox for Dhaka. Despite being home to one of the world’s largest Muslim populations, a robust agricultural base and a growing pharmaceutical sector, the gap between Bangladesh’s estimated domestic halal market potential of more than $125 billion and its international performance—still below $1 billion in halal-related exports—is striking. The problem is neither the absence of supply nor the lack of demand. It is institutional inertia. Bangladesh possesses many of the raw ingredients for success yet lacks the cohesive framework required to transform potential into sustained economic performance.

A large Muslim population, however, is not an industrial strategy. Nor does religious identity automatically create export competitiveness. Countries that have successfully developed halal industries have done so by investing in institutions—certification authorities, testing laboratories, accreditation systems, research capacity, logistics networks, specialised industrial infrastructure and international market access. Halal, in other words, is not merely an identity-based market. It is an ecosystem built on capability and trust.

Certification as Trade Infrastructure: Bangladesh traditionally thinks of infrastructure in physical terms: roads, bridges, ports and power plants. But modern international trade increasingly depends on another form of infrastructure—standards infrastructure. A sophisticated laboratory can be as important to an exporter as a highway, while a credible certification system can determine market access as effectively as a port. Digital traceability, meanwhile, is rapidly becoming a competitive advantage in its own right.

This is particularly relevant to halal trade. A Bangladeshi manufacturer may produce a high-quality food product or pharmaceutical, but if its certification is not recognised in the destination market, commercial access may remain difficult, costly or impossible. The obstacle is not necessarily the quality of the product itself; it is the absence of trusted assurance.

Bangladesh must therefore stop treating halal certification as a peripheral administrative or religious function and instead recognise it as part of its trade infrastructure. A modern halal assurance system requires harmonised standards, technically competent auditors, internationally accredited laboratories and a clear regulatory authority. It must also be supported by mutual recognition arrangements with reputable certification bodies and major importing countries. Without such recognition, Bangladeshi exporters may be forced to obtain additional foreign certification, increasing costs and reducing competitiveness.

Digital traceability should be another priority. Increasingly, consumers and regulators want to know not only what is inside a product but also where its ingredients originated, how it was processed and whether the supply chain maintained its declared standards. A credible system capable of tracking products from farm to factory and from factory to consumer would strengthen Bangladesh’s halal exports, while also improving food safety, quality control and export credibility across the wider economy.

Diversification Through Existing Strengths: One of the strongest arguments for developing the halal economy is that Bangladesh does not need to create an entirely new industrial base. It can begin by upgrading sectors in which it already possesses capabilities.

The pharmaceutical industry is an obvious example. Bangladesh has developed substantial manufacturing capacity in generic medicines, but the next stage of growth must involve moving into more specialised and higher-value market segments. Demand for halal pharmaceuticals is expanding in markets where consumers and regulators seek assurance regarding ingredients such as gelatin, alcohol and other animal-derived substances. The opportunity, however, should not be reduced to a marketing label. The real competitive advantage will come from scientific capability—research, formulation expertise, alternative ingredients, quality assurance and internationally recognised certification.

The same logic applies to food and agriculture. Bangladesh possesses significant agricultural resources, fisheries and a growing food-processing industry, yet its presence in high-value international markets for processed foods, frozen products and ready-to-eat meals remains limited. The problem is not simply production capacity. It is the ability to preserve quality, maintain traceability and meet the logistical standards required by modern international supply chains. Investment in cold chains, specialised warehousing, modern processing facilities and efficient logistics could therefore support halal food exports while simultaneously improving the country’s broader agricultural export competitiveness.

This is why the halal economy should not be understood as an isolated sector. It can serve as a catalyst for wider industrial upgrading. Much of the infrastructure required to develop a credible halal food industry—better testing, cold storage, traceability and logistics—is also the infrastructure required for a modern food-export economy.

Beyond Contract Manufacturing: The modest fashion market presents another opportunity Bangladesh should examine more seriously. The country already possesses one of the world’s largest garment manufacturing industries, but its participation in global fashion remains heavily concentrated in contract manufacturing, where a substantial share of the highest value is captured by foreign brands, designers and retailers.

Modest fashion offers a potential route towards higher-value participation. Bangladesh has the factories and production capacity, but it needs greater investment in design, branding, consumer research and direct market engagement. The ambition should not simply be to manufacture modest fashion for brands headquartered in Dubai, London or Kuala Lumpur. Bangladesh should seek to develop its own brands capable of understanding and serving global Muslim consumers.

This transition will require capital, expertise and a greater willingness to take commercial risks. Building brands is far more difficult than contract manufacturing. Yet an economy seeking higher-income status cannot remain permanently at the lowest-value end of global supply chains. Bangladesh’s future must involve capturing more value, not merely producing greater volumes.

Economics of Trust: Perhaps the strongest economic argument for developing the halal sector lies in the broader question of trust. Bangladesh’s international competitiveness has historically been associated largely with cost. But cost advantages are neither permanent nor sufficient. Wages rise, automation advances and competing countries develop similar manufacturing capabilities. The next phase of Bangladesh’s competitiveness must therefore rest increasingly on quality, reliability and reputation.

Modern halal standards emphasise traceability, hygiene, quality control and supply-chain integrity. These principles overlap substantially with the requirements of high-value international markets. A company capable of meeting rigorous halal requirements is also likely to improve its ability to meet demanding standards in food safety, pharmaceuticals and ethical production.

The economic value of halal therefore lies partly in the institutional discipline it creates. It requires firms to document processes, rewards credible testing, encourages transparent supply chains and turns reputation into a commercial asset. Bangladesh needs precisely this transition—from competing primarily on price to competing increasingly on trust.

The Missing Ingredient: The greatest risk to Bangladesh’s halal ambitions is institutional fragmentation. Commerce may focus on exports, religious authorities on certification, industries on production, agriculture on raw materials, and health regulators on pharmaceuticals and food safety. Each institution may perform an important function, but without strategic coordination the result will remain a collection of disconnected initiatives rather than a functioning economic ecosystem.

Bangladesh needs a national halal economy strategy with clear institutional leadership, measurable targets and defined responsibilities. Such a strategy should focus on internationally credible certification and accreditation, advanced laboratory capacity, digital traceability, specialised logistics and industrial infrastructure, research and innovation, and targeted support for small and medium enterprises.

SMEs deserve particular attention. Large companies will play an important role, but smaller enterprises are likely to generate much of the innovation, employment and product diversification required for a dynamic halal economy. Many, however, lack the resources to obtain certification, upgrade technology or navigate foreign regulatory systems. Targeted financing and technical assistance could therefore produce significant returns.

Economic diplomacy must also become part of the strategy. Bangladesh’s embassies and trade missions should systematically identify halal market opportunities, regulatory requirements and potential commercial partnerships. Participation in international halal exhibitions should be connected to long-term export objectives rather than treated as isolated promotional events. The financial sector, including Islamic financial institutions, should likewise explore mechanisms to support enterprises investing in certification, technology and export expansion.

A halal economy cannot be built on declarations. It requires institutions, capital and sustained execution.

The Cost of Delay: Bangladesh is not entering an empty market. Malaysia and Indonesia have already developed strong institutional and commercial positions, while Gulf countries are investing heavily in logistics, food security and international trade infrastructure. As governments increasingly recognise halal markets as strategic economic opportunities, competition is becoming more intense.

Bangladesh should therefore not assume that demographic advantage guarantees commercial success. It does not. The real competition is not between Muslim and non-Muslim countries; it is between countries with credible institutions and those without them. Bangladesh’s large consumer base and productive potential will mean little if its certification is not internationally trusted, its supply chains remain inefficient or its exporters lack the market intelligence required to compete.

The cost of delay is therefore greater than lost export revenue. It is the potential loss of strategic position.

From Identity to Capability: The strongest argument for Bangladesh’s halal economy is ultimately not theological. It is economic. The halal market has evolved into a global system in which standards, traceability, safety and ethical assurance carry commercial value. Bangladesh already possesses many of the productive capabilities required to participate in that system, but those capabilities remain disconnected.

Agriculture, pharmaceuticals, garments, logistics, finance, research and certification continue to operate largely as separate policy domains. The strategic task is to connect them.

Bangladesh has repeatedly demonstrated its capacity for economic transformation. The rise of the garment industry remains the most powerful example of how entrepreneurship, policy support and collective effort can create a globally competitive sector. The next stage of development, however, requires a more sophisticated model. Bangladesh must move from competing primarily on cost to competing increasingly on credibility; from exporting products to exporting assurance; and from fragmented sectoral initiatives to an integrated national strategy.

The halal economy offers a practical framework through which these transitions can begin. It is not a cure for every economic challenge, nor can it substitute for broader improvements in governance, education, infrastructure and financial markets. But it can help Bangladesh address several strategic challenges simultaneously: export diversification, industrial upgrading, quality improvement and access to new high-value markets.

Bangladesh has the demographic foundation, the productive base and the entrepreneurial energy. What remains uncertain is whether it has the institutional capacity—and political determination—to connect these assets into a coherent economic strategy.

The time for another committee, another seminar or another certification logo has passed. What Bangladesh needs now is execution. The government should establish a time-bound national halal economy strategy, designate a lead coordinating authority, align certification with internationally recognised standards, invest in accredited laboratories and digital traceability, negotiate mutual-recognition arrangements with key markets, and create targeted financing and technical support for firms seeking to enter the sector. Industry, meanwhile, must move beyond viewing halal as a compliance cost and recognise it as a route to higher-value markets and stronger global credibility.

The test should be measurable: more internationally recognised certifications, more value-added exports, more firms entering premium markets and a steadily expanding share of halal products in Bangladesh’s non-garment export basket. Anything less risks turning a potentially transformative opportunity into another item on the long list of unrealised national ambitions.

Bangladesh has already proved that it can build a globally competitive industry from modest beginnings. The question now is whether it can repeat that achievement with greater institutional sophistication. The halal economy offers the market opportunity; technology offers the tools; Bangladesh’s entrepreneurs offer the capacity. What is missing is the strategic coordination to bring them together.

The choice is ultimately between being a large halal consumer and becoming a trusted halal producer. The former requires little more than demographics. The latter requires institutions, investment, standards and ambition.

Bangladesh should choose the latter—and begin building that future now.

Mir Lutful Kabir Saadi is Dhaka Bureau Chief, Radiance News, New Delhi.​