Foreign reserves climb as economy shows early recovery signs: MCCI
Business Report :
Bangladesh’s economy is showing early signs of recovery in the first quarter (Q1) of the current fiscal year, though overall growth remains sluggish, according to the Metropolitan Chamber of Commerce and Industry, (MCCI), Dhaka.
In its July-September 2025 economic review released on this week, the trade body noted that improvements in exports, imports, inflation, and remittances have helped stabilise foreign-currency reserves and supported broader economic activity.
According to the Bangladesh Bureau of Statistics (BBS), GDP growth slowed to 3.35 per cent in the fourth quarter (Q4) of FY25, down from 4.86 per cent in the previous quarter. MCCI attributed the subdued environment to prolonged political uncertainties and the spillover effects of tight monetary and fiscal policies implemented since last year, which have dampened domestic demand.
“Several sectors recorded year-on-year improvements during the quarter, supported by easing inflationary pressures and greater stability in the foreign exchange market,” the chamber said.
Private-sector credit growth fell to a historic low of 6.29 per cent in September 2025, far below last year’s 9.20 per cent and the central bank’s December 2025 target of 7.20 per cent, reflecting continued weak domestic demand. Meanwhile, public-sector credit surged 24.45 per cent year-on-year, driven by higher government borrowing, with net borrowing rising 27.22 per cent. Despite weak private credit demand, banking-system liquidity remained ample.
The industrial sector, which accounts for over one-third of national output, continued to face strong headwinds. Manufacturing-the largest sub-sector and a key export driver-slowed sharply to 4.64 per cent in Q4 FY25 from 7.51 per cent in the previous quarter. The services sector also slowed, expanding 2.96 per cent compared to 5.88 per cent in Q3 FY25.
Exports rose 5.25 per cent year-on-year to US$12.27 billion in Q1 FY26, driven by knitwear and woven garments, while imports increased 9.49 per cent amid higher food, fuel, and raw material costs. A strong financial account surplus of over US$1.6 billion and a balance of payments surplus of US$853 million helped boost foreign exchange reserves to US$31.43 billion in September 2025. Remittances also rose 15.95 per cent to US$7.58 billion.
Despite these gains, inflation remained high at 8.36 per cent, with rural households particularly affected. Non-food inflation rose to 8.98 per cent due to higher transportation, education, and healthcare costs.
MCCI warned that as Bangladesh moves into Q2 FY26, policymakers face the dual challenge of reviving private investment and industrial growth without undermining progress in stabilising inflation and external balances.