GED forecasts steady economic recovery for Bangladesh

The General Economics Division (GED) of the Planning Commission has projected a gradual economic recovery for Bangladesh, supported by positive trends in exports, remittances, a stable exchange rate, and easing inflation.

In its April 2025 Economic Update and Outlook, GED noted that investor confidence has improved, especially after the successful Bangladesh Investment Summit 2025. It also cited a moderately tight but accommodative monetary policy as a factor expected to support industrial growth.

“Economic recovery is being bolstered by a favourable external environment, including rising exports and remittances, currency stability, and declining inflationary pressures,” the report stated.

GED emphasised the need to reduce commercial lending interest rates to spur investment. It also highlighted the importance of tackling non-performing loans and improving banking sector efficiency to enhance access to credit.

On the fiscal side, the report stressed the government’s commitment to fiscal consolidation and more efficient project selection, with an emphasis on sustainable development to promote quality growth.

While overall inflation is projected to stay between 8.0% and 9.0% in April and May 2025, food inflation—once at 10.65%—fell to 8.93% in March due to increased supply of winter vegetables. Key contributors to March’s food inflation included rice (14.62%), fish (11.58%), and vegetables (6.08%), with notable price hikes in brinjal (17.12%), medium rice (16.73%), and hilsa (11.37%), driven by seasonal demand during Ramadan and the Bengali New Year.

The report pointed out that rural areas still experience higher inflation, underscoring the need for better food supply chain management.

The external sector showed renewed strength in March 2025. Remittance inflows hit a record $3.29 billion, marking a 65% year-on-year increase, driven by Eid-related transfers and a shift to formal channels due to tighter regulations. Cumulative remittances from July 2024 to March 2025 rose to $21.77 billion, up from $16.69 billion in the same period a year earlier.

As a result, foreign exchange reserves climbed to $25.62 billion.

Exports also grew by 11.44% year-on-year in March, reaching $4.25 billion—led by strong performance in the readymade garment sector. The government’s prompt response to the U.S. reciprocal tariff issue and a deal to increase imports of American agricultural products have eased pressure on exporters and ensured continued market access.

Despite these gains, domestic investment remains sluggish. In February 2025, deposit growth stood at 7.88% while private sector credit growth slowed to 7.15%—among the lowest in recent years. Contributing factors include high lending rates, economic uncertainty, and weakened bank health, with around 10 banks facing lending constraints due to irregularities.

Government borrowing from commercial banks rose by 60% year-on-year, further tightening credit availability for the private sector.

The exchange rate remained relatively stable in March, with the Taka trading between Tk 121.5755 and Tk 121.9542 per U.S. dollar, thanks to rising remittance inflows and improved reserves.

Following a weak first quarter—where GDP growth was just 1.96% due to an industrial slowdown and agricultural disruptions from flooding—Q2 of FY2025 saw a rebound to 4.48%, driven by a 7.1% growth in the industrial sector. Manufacturing grew by 8.49%, mining and quarrying by 8.01%, and wholesale and retail trade by 6.63%.

While signs of recovery are clear, GED stressed the urgency of accelerating reforms, boosting investment, and ensuring structural improvements to sustain momentum.