Economy showing signs of stabilisation
Staff Reporter :
Bangladesh’s economy is showing early signs of stabilization despite ongoing structural challenges, according to the “Economic Update and Outlook: May 2025” released on Tuesday by the General Economics Division (GED) of the Planning Commission.
The report highlights a continued decline in headline inflation alongside a strong rebound in export earnings in May, suggesting gradual improvements in macroeconomic indicators.
However, the GED cautions that underlying vulnerabilities remain, particularly in the external sector and overall price dynamics.
The report identified that headline inflation fell to 9.05per cent in May 2025, marking the lowest rate since the sharp post-COVID and war-related surges.
The decline is largely attributed to easing food prices, supported by both demand and supply-side measures from the government, alongside relative stability in the foreign exchange market.
Food inflation, although still elevated, has softened. Rice continues to dominate as the largest contributor (40per cent) to food inflation, followed by fish (28per cent) and fruits (11.93per cent).
While Boro paddy yields were expected to cool rice prices, the impact is yet to materialize significantly. Medium rice alone accounted for 20.46per cent of food inflation in May.
Price drops in items like potatoes (-13.3per cent) and hen (-3.87per cent) provided some relief. However, inflationary pressure persists from key non-food sectors, including housing (12.5per cent), clothing (10.4per cent), and transportation (6.9per cent).
Bangladesh’s external sector, which faced volatility earlier in the fiscal year, showed signs of resilience.
Exports rebounded strongly in May, surging to $4.74 billion – the highest monthly figure in the fiscal year – following a seasonal dip in April due to Ramadan and Eid holidays, as per the report.
The bounce-back underscores the adaptability of the export sector and strong external demand, despite ongoing global uncertainties.
The Economic Update and Outlook: May 2025 also state that the Bangladeshi Taka has depreciated notably against the US dollar over the past two years – from Tk108.96 in July 2023 to Tk122 in May 2025.
Despite the depreciation, the exchange rate stabilized in mid-June, suggesting managed intervention by the authorities.
The Nominal Effective Exchange Rate (NEER) dropped from 76.54 to 68.23, reflecting a weakening Taka relative to trading partners. The Real Effective Exchange Rate (REER) remained within 98-105, pointing to some retained competitiveness due to inflation differentials.
Besides, the General Economics Division (GED) Outlook projected cautious optimism amid persistent challenges.
While inflationary pressures appear to be moderating and the external sector is regaining ground, policymakers remain cautious.
The government’s focus on inflation control, improved remittance flows, and export sector strength offers a path toward recovery, but structural reforms and sustained forex inflows remain critical to long-term stability.