Net FDI inflows drop 28% in first half of 2026

Bangladesh recorded a sharp decline in net foreign investment inflows in the first half of 2026 as fresh equity inflows from international investors slumped, raising concerns.

During January-June this year, net foreign investment declined 28 percent year on year, from over $1,100 million to roughly $795 million, according to the latest Bangladesh Bank (BB) data.

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Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID), said Bangladesh had struggled for many years to attract FDI at a scale proportionate to the size of its economy.

“A sizeable further decline from an already low base is therefore particularly concerning,” he said.

In 2025, FDI inflows into Bangladesh rose 45 percent year on year to $1.78 billion, ending two consecutive years of decline, according to a report by the United Nations Conference on Trade and Development (UNCTAD) released in July.

However, the latest BB data showed that net equity capital inflows dipped 55 percent, from $345 million in the first half of 2025 to $155 million in the same period this year.

During the same period, net intra-company loans plunged 91 percent year on year, while reinvested earnings by firms operating in Bangladesh rose 68 percent.

Razzaque said the weakness in equity capital inflows was particularly serious.

“Equity investment represents a clearer commitment of fresh capital to new or expanding business activity. Its sharp decline suggests that fewer investors are currently prepared to make substantial new commitments in Bangladesh,” he said.

In his view, investor confidence was being affected by both domestic and global conditions.

“In an unusually uncertain environment, with geopolitical tensions, trade disruptions and weaker global growth prospects, investors are more cautious. In such circumstances, attracting new funds in relatively less-established investment destinations such as Bangladesh is extremely difficult,” Razzaque said.

“At the same time, our own macroeconomic strains, persistent energy shortages and wider business-environment difficulties are hardly sending reassuring signals to prospective investors.”

The RAPID chief said the near-term outlook looked discouraging given these trends.

“Unless there is a noticeable turnaround in the remaining months, 2026 appears likely to be another disappointing year for Bangladesh’s efforts to attract FDI.”