Outlook positive as reserves grow

Staff Reporter :

The General Economics Division (GED) of Bangladesh’s Planning Commission has projected a gradual economic recovery, driven by improving export performance, rising remittance inflows, relative exchange rate stability, and easing inflationary pressures.

In its Economic Update and Outlook for April 2025, the GED attributed the recovery momentum to growing investor confidence, particularly in the aftermath of the successful Bangladesh Investment Summit 2025. A moderately tight yet accommodative monetary policy is also expected to support renewed industrial activity.

“Economic recovery is expected to be supported by a favourable external environment, characterised by rising exports and remittances, exchange rate stability, and declining inflationary trends,” the report stated.

The GED underscored the importance of reducing commercial lending rates to stimulate private investment. In addition, it stressed the need to address non-performing loans and enhance the efficiency of the banking sector to improve credit accessibility.

The report highlighted the government’s continued commitment to fiscal consolidation, which is expected to bolster public finances. “Improving efficiency in selecting development projects-with a focus on sustainability-will enhance the prospects for quality growth,” it noted.

While inflation is projected to remain stable between 8.0 per cent and 9.0 per cent during April and May 2025, it remains a matter of concern. Food inflation, which peaked at 10.65 per cent in FY2023-24, declined to 8.93 per cent in March 2025, aided by increased supply of winter vegetables.

Key contributors to March’s inflation included rice (14.62 per cent), fish (11.58 per cent), and vegetables (6.08 per cent). Notably, the prices of brinjal (17.12 per cent), medium rice (16.73 per cent), and hilsa (11.37 per cent) rose significantly, driven by heightened seasonal demand during Ramadan and the Bengali New Year. Rural inflation continues to outpace urban figures, indicating a need for more efficient food supply chain management.

The external sector performed robustly in March, with remittance inflows reaching a record USD 3.29 billion-marking a 65 per cent year-on-year increase. The surge was attributed to Eid-related inflows and a policy-induced shift towards formal remittance channels. From July 2024 to March 2025, remittances totalled USD 21.77 billion, up from USD 16.69 billion in the same period the previous year, contributing to a rise in foreign exchange reserves to approximately USD 25.62 billion.