Business Report :
The General Economics Division (GED) of the Planning Commission has offered a cautiously optimistic economic outlook for May and June 2025, underpinned by ongoing reform initiatives and a gradually stabilizing macroeconomic environment.
In the May 2025 issue of the Economic Update and Outlook, it is projected that economic recovery will continue to gain traction, supported by favorable trends in the external sector. Contributing factors include growth in exports and remittances, a relatively stable exchange rate, declining inflationary pressures, and a consistent rise in both bank deposits and private sector credit.
Although the global economy is maintaining a stable pace, the Outlook cautions that internal challenges-particularly lingering inflation and political uncertainty-could affect short-term momentum. It stresses the importance of sound fiscal measures in the upcoming budget to mitigate inflationary impacts and enhance investor confidence, which will be critical for sustaining the recovery into the next fiscal year.
Despite continued underperformance in revenue collection, the report highlights recent structural reforms as a positive step. Notably, the National Board of Revenue (NBR) was dissolved and replaced on May 12, 2025, by two new entities-the Revenue Policy Division and the Revenue Management Division-under the Ministry of Finance. This overhaul, enacted through an Ordinance, follows recommendations from task forces formed by the Planning and Finance Ministries, aiming to eliminate inefficiencies and conflicts of interest while promoting data-driven policy formulation.
The GED further outlines the launch of a Medium- and Long-Term Revenue Strategy (MLTRS) covering FY2025-26 to FY2034-35. The strategy aims to raise the tax-to-GDP ratio to 10.5% by FY2034-35. The report emphasizes the need to critically assess past reform shortcomings to ensure successful implementation, noting that Bangladesh’s current tax-to-GDP ratio lags behind comparable economies.
Bangladesh’s foreign exchange reserves have continued to improve, indicating a stronger external position. Gross reserves increased from $25.8 billion in July 2024 to $27.4 billion by April 2025, while BPM6-compliant reserves rose from $20.4 billion to $22.0 billion over the same period. The government’s clearance of significant import payments for LNG, oil, and electricity has further reinforced reserve stability.
While some fluctuations occurred-such as a temporary dip in November 2024 followed by a recovery in December-these were attributed to short-term changes in external inflows and valuation effects. The typical $5-6 billion gap between gross and BPM6 reserves reflects non-reserve assets excluded by BPM6 standards.
In March 2025, aggregate bank deposits grew by 8.51% year-on-year-the highest in nine months-driven by stronger public confidence and record-high remittance inflows. Private sector credit growth also accelerated, reaching 7.57% in March from 6.82% in February, reversing a trend of prolonged stagnation.
However, borrowing by the public sector from commercial banks surged, reaching Taka 985.79 billion by mid-April 2025-a 60% increase compared to the same period last year. This spike is largely attributed to weak revenue performance and the central bank’s suspension of direct financing, which may restrict credit availability for private borrowers.
As of April 2025, the external sector presented mixed signals. Remittance inflows saw a substantial 35% year-on-year rise, which contributed to a forecasted narrowing of the current account deficit-from 1.4% of GDP in FY2024 to 0.9% in FY2025-thanks to rising remittances and a reduced trade gap.
Conversely, export performance weakened. April posted the lowest monthly export earnings of the fiscal year at $3.01 billion, reflecting only a modest 0.86% increase. This was mainly due to a slowdown in apparel exports, the Eid al-Fitr holidays, and uncertainty linked to potential reciprocal tariffs by the U.S. administration.
Inflation registered a slight drop in April compared to March, primarily due to falling prices of staple foods such as rice and fish. The Outlook recommends strengthening strategic food stockpiles and expanding targeted social safety programs-including school feeding schemes, food-for-work projects, open market sales, and employment guarantees-as vital steps, especially given budgetary constraints and rising food costs.
In conclusion, the GED emphasizes that while there are encouraging signs of recovery in Bangladesh’s economy, ensuring macroeconomic stability and inclusive growth will depend on sustained revenue enhancement, careful fiscal management, and well-targeted social protection initiatives in the coming months.
