Bangladesh Economy Daily Brief (5 pm Dhaka)
Topline: Signs of a cyclical rebound are emerging, but political uncertainty and high borrowing costs are keeping private investment on the sidelines. External balances are improving, with the central bank buying dollars from banks and the current account swinging further into surplus, even as public debt climbs.
– Growth and outlook: October activity indicators point to expansion, and multilateral assessments say the economy rebounded in the second half of FY25, contingent on continued reforms to sustain inclusive growth and stabilize prices.
– Investment sentiment: Investors are delaying decisions amid political uncertainty, slowing fresh capital commitments despite improving macro signals.
– Monetary conditions: Business leaders urged the central bank to reinstate single-digit lending rates to spur investment. For now, a tighter stance persists as authorities prioritize inflation control and currency stability.
– External sector: The current-account surplus has increased, aided by softer imports and steady FX inflows. Reflecting improved liquidity, the central bank has purchased over $2.0 billion from banks, a reversal from the heavy dollar sales seen during the FX stress of recent years.
– Public finances: Government debt has risen to roughly Tk 20 trillion, heightening interest costs and potential crowding-out risks if domestic borrowing remains elevated.
– Prices: Vegetable prices were slightly volatile this week, while meat and eggs stayed broadly stable—suggesting mixed but easing pressure in parts of the food basket.
– Trade risk: A slowdown in exports to the US—Bangladesh’s single largest market—poses a near-term headwind for RMG orders, export earnings, and related employment if the weakness persists into the winter sourcing season.
What to watch
– Central bank policy signals on lending rate corridors and liquidity management.
– October remittance and export prints for confirmation of external improvement.
– Fiscal borrowing mix in the upcoming auctions as debt pressures rise.
– Food price trajectory heading into the year-end holiday period.
