Economic recovery remains fragile

Staff Reporter :

Bangladesh’s economy is still facing strain, with signs of improving stability but a recovery that remains fragile, the Metropolitan Chamber of Commerce and Industry (MCCI) said on Monday.

In its review of the economic situation for October–December of fiscal year 2025–26, the chamber noted that robust remittance inflows helped shore up foreign exchange reserves and maintains overall balance-of-payments stability, even as the trade deficit widened.

According to the report, economic performance during the quarter was mixed. Growth stayed modest due to weak export earnings, sluggish private investment and a tight monetary stance.

Persistently high inflation led to continued credit tightening, further weighing on business activity, the chamber said.

The agriculture sector employing around 44 percent of the country’s workforce posted growth of 2.3 percent in the first quarter of FY26, down from 3.02 percent in the previous quarter, despite favourable weather conditions and strong government support through timely inputs and financing.

The industrial sector, the second-largest contributor to GDP after services, recorded a stronger rebound, growing 6.97 percent in the first quarter of FY26, compared with
2.38 percent in the preceding quarter.

The services sector also improved, expanding 3.67 percent from 2.51 percent in the previous quarter, which was the fourth quarter of FY25.

Exports slipped 0.54 percent year-on-year to $24.4 billion in July–December of FY26 from $24.53 billion in the same period of FY25.

The decline was largely driven by weaker performance in both knitwear and woven garments, the report said.

Despite this, apparel exports continued to dominate, accounting for 80.62 percent of total export earnings.

Imports rose 5.16 percent to $29.13 billion in July–November of FY26 from $27.70 billion a year earlier, while import payments in November 2025 increased 7.83 percent year-on-year.

Remittance inflows jumped 18.05 percent during July–December of FY26, supported by government initiatives such as higher cash incentives, simplified regulations and measures to encourage the use of formal transfer channels.

The MCCI said the economy is attempting to navigate challenges arising from ongoing political uncertainty and a volatile global environment, resulting in uneven performance across key indicators.

Looking ahead, the chamber expects exports, imports and foreign exchange reserves to post gains over the next three months.