As Moody's downgrades Bangladesh's banking sector outlook due to rising asset risks and deteriorating economic conditions, how will Professor Yunus justify his optimistic claims that the country's economy is on the right track, especially in light of his own adviser Dr. Anisuzzaman Chowdhury's warnings about unprecedented economic fragility?

Moody's has raised concerns about Bangladesh's economy, questioning Yunus's optimistic claims.

On March 11, Dr. Anisuzzaman Chowdhury, special assistant to the chief advisor also highlighted unprecedented economic fragility in Bangladesh. he noted that Bangladesh's current situation is worse than that of countries like Indonesia.

Dr. Chowdhury's statement contradicts Chief Advisor Dr. Yunus's assurances that the economy is on the right track.

Following Dr. Chowdhury's concerns, Moody's downgraded Bangladesh's banking sector outlook to negative.

Moody's cited worsening asset quality, high inflation, and slowing economic growth as reasons for the downgrade.

Professor Yunus and his press office have vehemently denied the alarming assessment of the country’s economic downturn, as highlighted by none other than Yunus’s own special adviser on economic affairs, Dr. Anisuzzaman Chowdhury.

On March 11, Dr. Chowdhury, the special assistant to the chief advisor on economic affairs, warned that Bangladesh is experiencing unprecedented economic fragility. He noted that the situation is now worse than in countries like Indonesia, which have faced similar economic challenges.

He also pointed out that the interim government’s policies are creating uncertainty for investors, as political and economic stability are deeply intertwined, making it difficult to ensure the sustainability of investments.

This statement starkly contradicts the repeated assurances from Chief Advisor Dr. Yunus, who has consistently claimed that the country’s economy is on the right track.

However, just a day after Yunus’s economic adviser’s concerns, global rating agency Moody’s downgraded Bangladesh’s banking sector outlook to negative, citing rising asset risks and deteriorating economic conditions.

Moody’s report attributes the downgrade to worsening asset quality, high inflation, and slowing economic growth, all of which are expected to undermine the profitability and financial stability of banks. The agency forecasts that Bangladesh’s real GDP growth will decline to 4.5% in the fiscal year ending June 2025, down from 5.8% the previous year. The operating environment is expected to worsen due to a combination of economic slowdown, high inflation, political and social instability, and disruptions in supply chains, particularly in the garment sector.

The report also highlights mounting risks in the banking sector, with non-performing loans (NPLs) rising sharply. As of September 2024, the systemwide NPL ratio had surged to 17%, up from 9% just nine months earlier. This alarming trend raises serious questions about the resilience of Bangladesh’s financial system and the accuracy of Dr. Yunus’s optimistic economic outlook.