Bangladesh Economy Daily Brief (5 pm Dhaka)
Macro and policy
– Growth slows before rebound: The latest multilateral forecast pegs GDP growth at 3.9% in FY2025, with a rebound expected in FY2026 as stabilization takes hold and supply-side constraints ease.
– LDC graduation prep: Dhaka will seek additional support from multilateral lenders ahead of 2026 graduation, aiming to smooth the shift away from concessional finance and guard against preference erosion.
– IMF program track: The most recent program reviews remain the anchor for policy—authorities are working toward reserve build-up, fiscal consolidation and structural reforms to improve investment climate.
Fiscal
– Strong start to FY26 revenue: Tax collections rose about 25% year-on-year in the first month of the new fiscal year, suggesting early gains from enforcement and base effects. Sustaining the pace will be key to financing social protection and development spending without adding debt pressure.
External sector and trade
– Trade architecture in motion: Dhaka is pushing to conclude an Economic Partnership Agreement with the EU by 2028 to preserve market access post-LDC, while also exploring entry into the RCEP bloc to diversify export destinations.
– External stability improving: Despite domestic strains, recent readings point to steadier external conditions. Still, debt servicing costs are rising, with average external borrowing rates reported near 5%, underscoring the need to lengthen maturities and prioritize cheaper financing.
Investment and reforms
– Private sector at the center: Policymakers and business leaders emphasize unlocking private investment to navigate near-term headwinds. Labor-market reforms are flagged as crucial to attracting larger, higher-quality FDI.
– Green transition finance: Securing affordable capital remains pivotal for energy transition projects that can reduce import dependence and improve competitiveness.
Industry and corporates
– Leather’s push for durable growth: The leather and footwear value chain is positioning for higher exports through compliance upgrades, environmental standards and deeper value addition—seen as a potential new growth engine beyond RMG.
– BEXIMCO outlook: The conglomerate signaled it is banking on new foreign investment to return to profitability next year, a bellwether for corporate financing sentiment.
– Agriculture snapshot: Crop diversification continues to lift rural incomes in pockets—recent reports from Khulna’s watermelon belt highlight the gains from shifting to higher-value produce.
Context and risks
– Sentiment is mixed: While stabilization signs are emerging externally and revenue intake has improved, households and smaller firms still face tight liquidity, elevated costs and soft demand. Rising global rates and slower trade partners remain key risks.
What to watch
– September export and remittance prints, reserve trajectory and FX liquidity.
– Progress on EU EPA talks and any formal steps toward RCEP accession.
– Next milestones under the reform program and any updates on additional multilateral financing.
– NBR collection trends in Q1 FY26 and the investment pipeline in power, logistics and manufacturing.
