Written by The Banking Post
Bangladesh’s economy is showing signs of gradual stabilisation, but sluggish investment and weak private-sector credit growth continue to weigh on recovery prospects, according to the latest Economic Update and Outlook released by the General Economics Division (GED) under the Planning Commission.
The October report, published on Tuesday, notes that despite recent policy measures by the government and the Bangladesh Bank, private-sector credit grew only 6.35 per cent in August — the lowest in a decade — as banks continue to favour government borrowing.
High lending rates, averaging 13–15 per cent, have dampened business confidence and discouraged new ventures, factory expansions, and technology upgrades. This has led to stagnation in both employment generation and industrial production, the report warns.
“Without a rebound in private-sector lending, growth in production, jobs, and exports could remain subdued,” the GED cautioned, adding that large government borrowing at high interest rates risks crowding out private investment.
Inflation, exports, and reserves
Headline inflation edged up slightly to 8.36 per cent in September from 8.29 per cent in August, driven by higher food and non-food prices. While rice prices have softened, the costs of fish, meat, and edible oil remain high, keeping pressure on low- and middle-income households.
Exports remained broadly steady but fell to $3.63 billion in September from $3.92 billion in August, with the ready-made garment (RMG) sector accounting for over 80 per cent of total receipts. Non-RMG sectors such as jute, leather, and light engineering maintained stable performance.
On the external front, foreign exchange reserves rose to $31.4 billion in September from $25.5 billion in March, supported by stronger remittance inflows and slower import payments.
Revenue collection gains momentum
Government revenue collection grew by 21 per cent during July–August of the current fiscal year, led by sharp increases in VAT (up 34%) and income tax (up 24%). Customs revenue, however, fell 4.5 per cent amid reduced import activities.
Policy push needed
The GED report concludes that while the economy is stabilising, sustained recovery will require a revival in investment momentum.
It calls for lower interest rates, stronger banking sector governance, and a more predictable business environment supported by political stability and transparent regulations to attract both domestic and foreign investors.
