Dhaka, Oct. 14 -- Bangladesh's economy has found some breathing space in its foreign currency flows, but the relief has yet to reach the factories, businesses and investment decisions that drive growth.

Instead, three key indicators are flashing warning signs: imports of industrial machinery are falling, private-sector credit growth remains below 5 percent, and government development spending has slowed to a crawl.

Together, they paint a picture of an economy struggling to turn greater external stability into productive activity.

Business leaders blame high borrowing costs, energy shortages, concerns over law and order, and uncertainty over whether new investments will generate adequate returns.

Economists warn that if the slowdown pe...