Written by The Banking Post
Bangladesh’s economy has regained momentum and achieved a degree of macroeconomic stability, but persistent inflation and fiscal pressures continue to weigh on the outlook, according to the General Economics Division (GED) of the Planning Commission.
The findings were published in the August issue of the “Monthly Economic Update and Outlook”, released on Sunday. The report cautioned that sustained challenges — including youth unemployment, regional disparities, multi-dimensional poverty, and climate vulnerability — pose risks to long-term stability.
The GED stressed the need to expedite reform initiatives to rebuild trust and confidence, noting that while the interim administration has laid out a blueprint, the ultimate success of reforms will depend on the political will and institutional capacity of the next elected government.
Inflation emerges as key threat
The publication identified inflationary pressure as the most pressing concern, with consumer prices remaining well above the government’s target. The surge was driven primarily by food inflation amid supply disruptions and higher import costs.
Non-food inflation also edged up, reflecting adjustments in fuel prices and the pass-through effects of exchange rate depreciation. The report warned that persistently high inflation is eroding real incomes and dampening consumption, particularly among low- and fixed-income households.
While the government has scaled up subsidised food distribution and cash transfer programmes, GED said these measures remain inadequate to fully protect vulnerable groups.
Policy recommendations
The report recommended stronger monetary-fiscal coordination to balance inflation control with growth support. Although the Bangladesh Bank’s tightening measures have slowed private-sector credit growth, their impact on inflation has been limited.
It also called for accelerating structural reforms, especially in revenue mobilisation and improving the investment climate, to reinforce macroeconomic resilience.
Economic outlook
Despite inflationary stress, the GED highlighted positive trends: agriculture continues to safeguard food security, industry is buoyed by infrastructure investments, and services are expanding on the back of digitalisation and domestic demand.
Remittance inflows have provided steady external support, cushioning the impact of global shocks. Growth is projected to remain above 6.0 per cent, though external uncertainties and domestic bottlenecks cloud the near-term outlook.
The report underscored that reviving economic activity will require carefully balancing stabilisation measures with growth incentives, as tight credit conditions, subdued household demand, and fiscal constraints continue to weigh on private investment.
