Industrial rebound lifts Q2 GDP to 4.48pc

Staff Reporter :

Bangladesh’s economy recorded a modest improvement in the second quarter of the fiscal year 2024-25, with gross domestic product (GDP) growing by 4.48 per cent on a point-to-point basis during the October-December period, according to data released by the Bangladesh Bureau of Statistics (BBS) on Tuesday.

This figure marks a slight increase compared to the same quarter in the previous fiscal year (2023-24), when GDP growth stood at 4.47 per cent. Though incremental, the rise reflects the continuation of economic recovery efforts amid both domestic and global challenges.

In contrast, the first quarter of FY2024-25 (July-September) saw subdued growth of just 1.96 per cent, underscoring the economic hurdles encountered earlier in the fiscal year.

A breakdown of sectoral data reveals a mixed performance. Both the agriculture and services sectors experienced slower growth during the second quarter, highlighting structural issues as well as temporary factors such as erratic weather patterns, inflationary pressures, and subdued consumer demand.

The agricultural sector, a key contributor to GDP and rural employment, grew by just 1.25 per cent in Q2, a marked decline from 4.09 per cent in the same period last year.

Analysts attribute this downturn to rising input costs, irregular rainfall, and disruptions across supply chains. Despite the decline, agriculture remains vital for food security and income generation in rural areas.

The services sector, traditionally a strong driver of GDP growth, also witnessed a sharp deceleration. Growth in Q2 FY2024-25 stood at 3.78 per cent, compared to a robust 7.10 per cent in the corresponding quarter of the previous fiscal year.

This slowdown reflects reduced activity in key areas such as retail, transport, and hospitality, likely impacted by weaker consumer confidence and global economic uncertainty.

In contrast, the industrial sector showed strong signs of recovery, emerging as a key growth driver. Industrial output expanded by 7.10 per cent in Q2, a substantial improvement from the modest 1.04 per cent growth recorded during the same quarter of FY2023-24.

This resurgence is largely attributed to heightened manufacturing activity, particularly within the ready-made garments (RMG) sector, which continues to lead Bangladesh’s export earnings. Improved energy supply and increased investment in infrastructure and production facilities also contributed to the sector’s momentum.

Despite the uneven short-term performance, Bangladesh’s long-term economic outlook remains encouraging. Over the past decade, the country has shown resilience in the face of global crises, consistently achieving strong GDP growth while making progress in health, education, and poverty reduction.

Looking ahead, several key drivers are expected to support Bangladesh’s growth trajectory such as demographic dividend, export diversification, infrastructure investment, digital transformation and regional integration.

With a large and youthful population, strategic investments in education, skills, and employment can unlock significant economic potential. Beyond RMG, emerging sectors such as pharmaceuticals, ICT, and agro-processing offer promising avenues for growth.

Policy reforms and incentives are supporting this diversification. Mega projects like the Padma Bridge, Dhaka Metro Rail, and Special Economic Zones (SEZs) are poised to enhance connectivity and attract domestic and foreign investment.

The government’s “Digital Bangladesh” initiative has set the stage for growth in fintech, e-commerce, and ICT services, improving productivity and creating jobs. Strengthened trade and connectivity within South Asia can help position Bangladesh as a key regional logistics and trade hub.

However, to fully harness these opportunities, Bangladesh must tackle persistent challenges including bureaucratic inefficiencies, financial sector vulnerabilities, and climate-related risks. Strategic reform, good governance, and investment in human capital and infrastructure will be essential for sustained progress.

While the latest fiscal data paints a cautiously optimistic picture, the broader outlook for Bangladesh remains positive. With targeted policy measures and sustained development efforts, the country is well-placed to continue on a path of stable, inclusive, and diversified economic growth.