Bangladesh Economy Daily Brief (5 pm Dhaka)
– IMF ups reform pressure: The IMF has tightened its stance ahead of the next review, urging quicker progress on macro reforms. The message underscores concerns over fiscal consolidation and broader policy execution, keeping reserve rebuilding and reform credibility in focus for the coming quarter.
– Tax take starts FY26 strong: Government revenue reportedly rose 25% year-on-year in the first month of FY2025-26, offering early support to a tight budget framework. Sustaining this pace will be critical as subsidy costs and interest payments remain elevated.
– Credit momentum fades: Private sector credit growth has fallen to its slowest since at least 2015, signaling weak investment appetite and cautious borrowing amid higher costs and subdued demand. The slowdown raises risks for capex-heavy sectors in the months ahead.
– Housing drag hits appliances/electricals: A Tk6,500 crore electrical and electronic market is shrinking as the housing slowdown curbs new installations and upgrades. Suppliers report softer orders and tighter cash cycles, with spillovers to retail and import demand.
– World Bank financing: Bangladesh has secured a US$250 million World Bank facility, adding a layer of external support to the balance of payments and development spending. Program specifics were not detailed.
– Climate and health headwinds: Analysts warn extreme heat and air pollution, alongside the current dengue wave, are imposing growing productivity and healthcare costs—risks that could further dampen output and urban labor efficiency if not contained.
– Election watch: The EU plans to deploy around 150 observers for the national election, a move markets will read as supportive of transparency and policy continuity.
What to watch
– IMF review timetable and any policy steps on taxes, energy pricing and FX operations.
– September remittance and export receipts for signs of external balance relief.
– Credit data for Q2 FY26 to gauge whether the investment slump deepens or stabilizes.
– Housing indicators and cement/steel sales as proxies for construction recovery.
