Capital Machinery Imports Collapse 32 Percent Despite Overall Import Growth, Stalling New Industrialisation

Although overall imports show a growth trend, imports of capital machinery—the main driver of industrial expansion and new industrialisation in the country—have suffered a major collapse. In the first two months (July-August) of the current 2026-27 fiscal year, total goods imports rose by 12.20 percent, but imports of capital machinery fell by 32.47 percent during the same period.

Such an unusual fall in heavy, production-oriented machinery within overall imports has created deep concern about stagnation in private investment and the future of job creation. When the machinery to set up new factories or raise the capacity of old ones is not arriving, the foundation for future production growth is not being built either.

According to updated Bangladesh Bank data, goods worth a total of US$12.896 billion were imported into the country in July and August of the current fiscal year, about US$1.403 billion more than in the same period of the previous fiscal year. On the surface, this increase could suggest returning demand in the economy, but the picture inside is different.

This upward trend carries no reflection of any increase in the industrial sector's long-term capacity. During the period, overall capital goods imports fell by about 20 percent to US$1.605 billion. Within that, imports of capital machinery specifically for setting up and modernising factories dropped from US$751 million to just US$507 million.

A review of the economic statistics shows that the expansion in overall imports rested mainly on payments for fuel oil and imports of some intermediate raw materials. During the period, crude fuel oil imports rose by 11.6 percent, and intermediate goods imports increased by 19.13 percent to reach US$8.463 billion.

However, imports of cotton, the basic raw material of the textile sector, fell by 5.61 percent. It is therefore clear that industrial entrepreneurs are limiting their spending to keeping existing production running, rather than building new factories or expanding capacity.

High interest rates, a liquidity crisis in the banking sector and extreme uncertainty over financing are playing a major role behind this severe contraction in capital machinery imports. The complications of obtaining loans from banks are also holding entrepreneurs back.

Years of a high dollar price have depreciated the domestic currency, significantly shrinking entrepreneurs' working capital as well. With the cost of importing machinery now much higher than before, implementing the same plan has become far more expensive.

Its direct impact has fallen on private sector lending; at the end of last August, private sector credit growth dropped to 4.75 percent, the lowest in history. At the same time, because expected levels of financing have not materialised from announced incentive funds, businesspeople do not want to take the risk of industrial expansion.

Alongside the economic constraints, the prolonged, severe crisis of electricity and natural gas has emerged as a major obstacle to new industrialisation. Running a factory is impossible without assurance of regular, uninterrupted energy supply; and with no visible path to a sustainable solution to the energy situation in the near future, investors are losing interest in installing new machinery.

According to economists' observations, a decline in the flow of capital machinery means stagnation has set into the overall investment process. If machinery does not arrive today, new production lines will not start tomorrow either—this chain effect is the main cause for concern.

If this trend continues, it will obstruct the creation of new jobs, shrink the purchasing power of ordinary people, and have a severely negative impact on the country's overall productivity in the long term. The collapse in machinery imports hiding behind overall import growth is therefore now the economy's biggest warning signal.