S&P Global Ratings has revised its long-term outlook on Bangladesh to negative from stable, citing persistent structural weaknesses in the domestic banking sector and heightened exposure to volatile global energy markets.
The agency’s move signals growing concern over the country’s ability to manage external shocks and maintain financial stability amid ongoing economic headwinds.
The downgrade underscores the fragility of Bangladesh’s financial system, where non-performing loans and liquidity constraints have weighed on credit growth and investor confidence.
S&P highlighted that the banking sector’s vulnerabilities are exacerbated by rising energy import costs, which strain the current account and limit fiscal flexibility.
These factors, combined with uncertainty surrounding trade conditions, have prompted the agency to adopt a more cautious stance on the country’s medium-term trajectory.
This development follows earlier warnings from S&P about the risks posed by Bangladesh’s reliance on external financing and its limited policy buffers.