Bangladesh’s Economic Collapse: How Yunus’s Missteps Pushed the Nation into Crisis

Bangladesh is going through one of the most difficult economic periods in its recent history. The promise of stability and reform that came with the interim government has quickly faded, leaving the country’s economy paralyzed and its people increasingly desperate. Every passing month brings new stories of families struggling to survive, workers losing their jobs, and small businesses shutting their doors.

Economic Growth Slows, Investment Hits 10-Year Low

Unemployment is on the rise, inflation remains stubbornly high, and wages are failing to keep up with the cost of living. The situation has become especially dire for the educated youth, with millions unable to find jobs that match their skills. In factories and markets across the country, frustration is visible. Once-thriving industries now operate at half their capacity, and thousands of laborers have been sent home as production slows.

Economists and business leaders have pointed to a growing lack of confidence under Muhammad Yunus’s leadership. His administration’s failure to stabilize the economy, ensure investor trust, and control inflation has only worsened the crisis. Many see this as a leadership failure,an inability to understand the urgency of economic recovery or the struggles of ordinary citizens. What was once seen as a transitional phase under Yunus is now being viewed as an era of economic stagnation, uncertainty, and lost potential.

Rising Prices, Falling Hope: The Daily Struggle of Ordinary Bangladeshis

Despite official claims of stability, Bangladesh’s inflation crisis continues to crush its citizens. In September 2025, inflation stood at 8.36%, alarmingly high for an economy already in distress. This modest decline offers little relief when prices remain out of reach for millions. Under Muhammad Yunus’s interim rule, poor economic planning and policy negligence have turned everyday survival into a struggle.

Inflation surges to 8.36% in September

The food inflation rate of 7.6% and the non-food inflation of 8.6% reveal a grim reality. The price of essentials,rice, lentils, cooking oil, and vegetables, has climbed steadily, while transport costs, utilities, and healthcare continue to rise. Families across urban and rural areas are being forced to cut back on meals, reduce nutrition, and postpone critical medical expenses just to stay afloat. Wages have stagnated, jobs are disappearing, and savings are drying up.

For example, a working-class family in Dhaka that once spent 30,000 taka a month now spends over 33,000 taka to maintain the same lifestyle. Their income, however, has not kept pace. They borrow money to cover groceries, school fees, or rent, trapped in a vicious cycle of debt and despair.

What’s worse, the Yunus administration’s inability to control prices or stabilize the financial sector has eroded public trust. Inflation is not merely an economic issue; it’s a measure of failed governance. Yunus’s misplaced priorities and weak economic management have left ordinary Bangladeshis paying the price for his inaction.

Bangladesh Worst in South Asia at Controlling Inflation

Banking Sector Crisis: A House of Cards Built on Mismanagement

Bangladesh’s banking sector stands today as one of the weakest in Asia, burdened by non-performing loans reaching a staggering 20.2% of total loans, a figure that reflects deep-rooted corruption, political interference, and chronic mismanagement. This is not a sudden collapse but the inevitable result of poor policy direction and institutional decay, much of which can be traced to the period of Muhammad Yunus’s growing influence in economic policymaking.

Crisis Deepens: Bangladesh’s Banking System Weakest in Asia

Under Yunus’s influence and his so-called “reformist” ideology, the focus shifted from strengthening public financial institutions to promoting short-term, donor-friendly experiments that undermined the country’s banking discipline. Loan recovery mechanisms were neglected, state banks became playgrounds for political favoritism, and accountability was replaced with bureaucratic inertia. Today, that neglect has metastasized, banks are crippled, liquidity is shrinking, and ordinary depositors live in fear of losing their savings.

The crisis has eroded public trust to a dangerous level. Investors, both local and foreign, are now hesitant to place their money in a system so riddled with uncertainty. As a result, foreign investment continues to decline, and domestic industries face credit shortages that choke production and employment.

Bangladesh’s current banking turmoil is not just a financial failure , it’s a symbol of how misguided leadership and misplaced priorities, championed by figures like Yunus, can push an entire economy to the brink.

Investment Stagnation and Private Sector Struggles: A Crisis Born of Uncertainty

Bangladesh’s private investment has fallen to just 29.38% of GDP , the lowest level in a decade, signaling a deepening crisis of confidence in the country’s economic direction. This collapse is not merely a reflection of global uncertainty but a symptom of chronic policy failures and mismanagement that trace back to Muhammad Yunus’s influence over the country’s economic narrative.

Over the past year, the business climate has grown increasingly hostile. High interest rates, now hovering around 16%, have made borrowing prohibitively expensive for small and medium enterprises. Meanwhile, persistent energy shortages have crippled factories, labor law ambiguities have discouraged industrial investment, and political instability has scared off both domestic and foreign investors. Instead of promoting policies that encourage sustainable growth, Yunus and his advisers championed half-measures and cosmetic reforms that did nothing to restore investor trust or stabilize the market.

Business leaders across the country describe a landscape of stalled projects, empty factories, and shrinking production lines. Many industrialists who once expanded operations are now scaling back or relocating altogether. Economists warn that if this stagnation continues, job creation will flatline and economic recovery will remain an illusion.

Factory Closures Mount: 115 Shut in Just 14 Months

The private sector, once the engine of Bangladesh’s growth, is now running on fumes. The blame lies squarely with leadership that failed to deliver stability or vision. Yunus’s misjudged priorities have left the economy paralyzed, forcing entrepreneurs to wait in uncertainty while the nation’s productive capacity slips further into decline.

GDP Growth and Economic Slowdown: A Country Paying the Price

Bangladesh’s GDP growth has slowed to just 3.97% in the 2024-25 fiscal year, the lowest in 25 years excluding the COVID-impacted period. This decline is not a temporary setback but a manifestation of systemic mismanagement and shortsighted policies that have left the economy vulnerable. Once a promising engine of growth in South Asia, the country now struggles to maintain even modest expansion.

The agriculture sector, the backbone of rural livelihoods, expanded by a mere 1.79%, far below historical averages. Meanwhile, the industrial sector shows stagnation, with factories operating below capacity, and the services sector, which supports employment for millions, is contracting. This combination of underperformance across all major sectors signals deep structural weaknesses in the economy, not fleeting market fluctuations.

Experts argue that these failures are tied directly to the policy environment shaped during Muhammad Yunus’s influence, which prioritized limited social programs over comprehensive economic reforms. Weak regulatory frameworks, political interference, and lack of accountability have prevented the implementation of meaningful policies to support productivity, investment, and sustainable growth.

The consequences are already visible: fewer jobs, rising poverty, and less government revenue to support essential services. Without immediate, strong action, stagnation could continue for years, hitting ordinary citizens hardest. Yunus’s legacy, in this sense, is a cautionary tale of misguided priorities and policy failures, whose effects are now being felt across the entire economy.

Rising Unemployment and Labor Market Crisis

Bangladesh is facing a deepening labor market crisis, with more than 60,000 workers losing their jobs in just the past nine months, according to World Bank data. The impact is widespread, hitting all sectors, but women are particularly affected, with labor force participation among women declining sharply. Wage reductions are widespread, and income inequality is rising, leaving many families struggling to meet basic needs.

Unemployment Rises by 60,000 in Just Three Months

The root of this crisis lies in stagnant investment and shrinking industries. Private sector growth has slowed to a decade-low, factories operate below capacity, and new ventures are put on hold due to political uncertainty, high interest rates, and energy shortages. As businesses hesitate, job creation stalls, and existing employment becomes increasingly precarious.

The human cost is devastating. Families are forced to cut essential expenses, many rely more heavily on remittances, and millions face the real threat of falling into extreme poverty. Children, the elderly, and the most vulnerable suffer the most, creating a generational ripple effect.

Much of this is the result of years of policy negligence and mismanagement shaped under Yunus’s influence. His era failed to enforce structural reforms, encourage private investment, or stabilize the labor market. The consequences are now painfully clear: Bangladesh’s workforce is under siege, and ordinary citizens are left to bear the brunt of leadership failures.

Policy Failures and Yunus’s Role

A large part of Bangladesh’s economic collapse can be traced back to the policy failures shaped by Muhammad Yunus’s influence. During his era, the banking sector was left vulnerable due to weak regulations and lenient loan policies, creating an environment where non-performing loans could balloon unchecked. Under his guidance, the system encouraged improper debt rescheduling and favoritism toward politically connected business groups, allowing powerful borrowers to evade accountability while ordinary citizens and small entrepreneurs struggled to secure credit.

Rising Prices, Job Crisis, and Money Printing: The Key Challenges Facing Bangladesh’s Economy

Yunus’s approach also reflected a neglect of long-term systemic reforms. Instead of strengthening regulatory frameworks, improving governance, and enforcing transparent loan recovery mechanisms, the policies focused on short-term appeasement and selective support. This shortsightedness allowed structural weaknesses to fester, leaving the economy exposed to shocks and crises.

The consequences of these failures are painfully visible today. Inflation continues to erode real incomes, as unchecked lending and fiscal mismanagement fuel price instability. The banking sector teeters on the edge, with non-performing loans exceeding 20% and public trust evaporating. Private investment remains stagnant, held back by a lack of confidence in institutions, high interest rates, and unclear policies. And the labor market suffers as industries shrink and job creation stalls, pushing thousands into poverty.

In short, Yunus’s policy negligence and favoritism have left a lasting imprint, setting the stage for widespread economic stagnation. What could have been decades of steady growth has instead become a cautionary tale of mismanaged influence and systemic failure, with ordinary Bangladeshis paying the price.

Everyday Bangladesh Suffers: Yunus’s Reckless Policies Push Families Into Poverty

The consequences of Bangladesh’s economic mismanagement are now painfully visible in every household. Rising unemployment, crushing inflation, and stagnant wages have pushed millions into poverty, while families scramble to survive under the weight of mounting debt. The once-thriving middle class is rapidly eroding, unable to withstand the fallout from reckless policies and institutional negligence.

Poverty Worsens as Economic Turmoil Grows

The worst affected are women and low-income households, who face shrinking job opportunities, soaring costs, and diminishing social protections. Families are forced to cut back on essential food, healthcare, and education, with many teetering on the edge of destitution. Food insecurity is rising sharply, healthcare access is limited, and social welfare programs are failing to reach those in desperate need. These are not natural misfortunes,they are the direct outcome of policy failures, weak governance, and systemic corruption allowed to fester under Yunus’s influence.

Yunus’s legacy of favoritism, lenient loan policies, and neglect of long-term reforms has left Bangladesh with a fragile economy, failing institutions, and a population paying the price. Ordinary citizens are bearing the brunt of decisions made to benefit a few politically connected elites, while the majority struggle to survive.

Bangladesh is at a crossroads. Without immediate, transparent, and decisive reforms, the downward spiral of poverty, unemployment, and social instability will deepen. The country cannot continue to tolerate the reckless legacy of leadership that sacrificed the welfare of its people for personal and political gain. The time for accountability is now.