Bangladesh Economy Daily Brief (5 pm Dhaka)
Top story
– Systemic strain intensifies: Banks reopened to heavy queues for cash withdrawals and utility payments, underscoring acute liquidity stress. Analysts warn mounting loan defaults are deepening the sector’s crisis, with confidence fragile.
Macro and prices
– Inflation eases, still high: September CPI dipped slightly to 9.92%, remaining near double digits and well above comfort levels.
– Growth outlook cut: The World Bank projects FY25 GDP growth at about 4% and expects macro pressures to persist for another year, though it says Bangladesh’s public debt remains manageable.
External sector and financing
– IMF lifeline: Bangladesh is seeking an additional $3 billion from the IMF; the Fund has signaled willingness to increase budgetary support.
– Import compression continues: Letters of credit opened fell in the first two months of FY25, reflecting weak demand and ongoing dollar tightness.
– Debt build-up: The country’s foreign debt has risen by roughly $80 billion over the past 15 years, increasing external financing needs.
Households and real economy
– Crisis biting: A new study finds one in five households has been hit by the financial crisis, aligning with reports of jobless growth and a renewed rise in poverty risks.
– Mixed signals on resilience: The government’s General Economics Division says the economy shows signs of renewed resilience despite ongoing stress.
Context and risks
– Multiple outlets describe the present episode as Bangladesh’s worst financial crisis in decades, driven by banking-sector weaknesses, high inflation, and external funding pressures.
– Investor sentiment remains sensitive to policy support, banking-sector stabilization, and the pace of disinflation.
What to watch
– Details and timing of any expanded IMF package and accompanying reforms.
– Central bank steps to stabilize liquidity and the exchange market.
– Trends in LC openings, export receipts, and remittances in Q2 FY25 to gauge external pressure.
– October inflation trajectory and any targeted measures to ease food and energy costs.
