Bangladesh Economy Daily Brief (5 pm Dhaka)
– Growth outlook: The Asian Development Bank projects GDP growth slowing to 4.0% in FY2025 amid persistent inflation, with momentum improving to around 5.0% in FY2026 as conditions stabilise. The message: a soft patch now, a modest pickup next year if price pressures ease and energy supply improves.
– Inflation: Elevated inflation remains the chief drag on consumption and investment, tempering the pace of recovery despite policy support. Businesses continue to report cost pressures across inputs and finance.
– Trade and tariffs: Policymakers are weighing tariff rationalisation under intensifying US trade scrutiny. The trade-off is clear—lower protection could boost export competitiveness and supply chain integration, but risks near-term revenue losses. Any roadmap will have implications for garments, light engineering and consumer goods.
– CMSMEs: Small and cottage industries are underperforming due to expensive credit, weak market linkages and compliance hurdles, limiting their contribution to jobs and exports. Stakeholders are urging better working-capital access, cluster infrastructure and digital market platforms.
– Steel industry: Producers report a tough year from construction slowdown, currency volatility and high raw material costs, but anticipate a rebound as public infrastructure projects pick up and financing conditions stabilise.
– Consumer market: Despite a roughly $500 billion economy, the formal FMCG market is only about $4 billion—signalling low penetration and significant headroom for organised retail and brands, contingent on real income recovery.
– Banking and finance moves:
– United Finance posted 6% profit growth in H1 2025.
– City Bank appointed Hossain Khaled as chairman, a notable governance change at a major private lender.
– Banks expanded customer reach and capabilities: new ATM installations at metro rail stations; training initiatives in Islamic banking, forex and trade; and a partnership between a leading bank and an agri-tech firm to digitise farm value chains.
– Insurers highlighted higher claims servicing in H1, underscoring pressure on household risk buffers.
Bottom line: Near-term growth is constrained by inflation and weak demand, but external-facing reforms—especially around tariffs and SME finance—could set up a gradual recovery into FY2026. Markets will be watching policy signals on prices, energy reliability and trade facilitation to gauge how quickly momentum can return.
