Economic outlook improves
Bangladesh’s economy showed signs of a broad-based recovery in July, with the Purchasing Managers’ Index (PMI) rising to 57.8, driven mainly by a strong rebound in manufacturing and growing expectations of a more supportive business environment.
The latest reading coincided with the country’s strongest monthly export earnings in nearly a year, suggesting that economic activity strengthened across several key sectors, according to a study unveiled on Monday.
The findings were presented by the Metropolitan Chamber of Commerce and Industry (MCCI), in association with Policy Exchange Bangladesh, at a seminar held at the MCCI office in Gulshan.
The July PMI showed continued expansion in agriculture and services, while construction remained just below the 50-point threshold that separates expansion from contraction.
Manufacturing recorded the strongest performance, with a PMI reading of 65.4, followed by services at 56.0, agriculture at 55.2 and construction at 49.3.
Speakers said the improvement across sectors reflected firmer business confidence, a more favourable external outlook and expectations of a more
supportive economic environment following the national budget.
They said the latest figures point to improving business conditions, although construction activity continues to lag behind other sectors.
PMI offers early economic signal
The PMI is a monthly, survey-based indicator that tracks economic activity through responses from senior private-sector executives in agriculture, manufacturing, construction and services.
A reading above 50 indicates expansion, below 50 signals contraction, while 50 indicates no change from the previous month.
Citing research by the European Central Bank, the US Federal Reserve Bank of Dallas and the Federal Reserve Bank of St Louis, the study said PMI data are released ahead of official GDP figures, are not revised after publication and have historically shown a strong correlation with actual GDP growth in major economies.
The Bank for International Settlements has also found PMIs to be reliable concurrent indicators of real economic activity, according to the presentation.
Manufacturing drives July recovery
The presentation traced the PMI’s movement from December 2023 to July 2026, showing significant fluctuations in response to economic and political shocks.
The index fell by 27 points between June and July 2024 during the July Uprising, when a nationwide curfew and a 10-day internet blackout disrupted factories, banks and the Dhaka-Chittagong highway.
It declined by 8.8 points between March and April 2025, amid long public holidays, early US tariffs on apparel and energy-supply constraints.
Another 7.8-point fall between October and November 2025 was attributed to weak global demand and investment caution ahead of the national elections.
Between May and June 2026, the PMI dropped by 9.9 points, as manufacturing and construction moved into contraction following long Eid holidays, the onset of the monsoon, weaker pre-Eid demand and the introduction of a new 15 per cent VAT.
The July rebound therefore marks a notable improvement after the sharp decline recorded in the previous month.
Data gaps hamper policy planning
The seminar also highlighted weaknesses in Bangladesh’s economic data infrastructure, which speakers said continue to make timely policy and investment decisions difficult.
Surveys such as the Household Income and Expenditure Survey (HIES) and Labour Force Survey (LFS) are conducted only once every five and three years respectively.
This leaves policymakers and businesses working with data that may no longer fully reflect rapidly changing economic conditions.
Speakers said the long gaps between major surveys create blind spots, limit local-level policy targeting and constrain private investment, particularly because of weak online data-sharing and limited transparency.
They stressed that more frequent surveys and modern economic indicators such as the PMI were essential for generating real-time economic insights and strengthening evidence-based decision-making.
400 firms in PMI panel
The Bangladesh PMI programme was conceptualised in 2022 against the backdrop of the COVID-19 recovery. Concept development began in early 2023, while the programme was formally launched in November 2023 with support from the UK’s Foreign, Commonwealth and Development Office (FCDO), in association with the Singapore Institute of Purchasing and Materials Management (SIPMM).
The first survey was conducted in December 2023, followed by three additional rounds through March 2024 to finalise the methodology and establish the survey panel.
The index currently draws on 400 companies across four sectors: 212 from services (53 per cent), 92 from manufacturing (23 per cent), 50 from construction (12.5 per cent) and 46 from agriculture (11.5 per cent).
The panel provides around 100 per cent GDP-weighted coverage across major economic sub-sectors, including wholesale and retail trade, real estate, transportation, manufacturing – including large, small and cottage industries – and crops and horticulture.
The seminar was attended by representatives of major Bangladeshi companies across the four sectors, including BRAC Bank, Standard Chartered Bank, Robi Axiata, Pran-RFL Group, Square Pharmaceuticals, Berger Paints and ACI, among others.
The latest PMI reading, together with the recovery in manufacturing and stronger export performance, provides an encouraging indication that economic activity is gaining traction.
Speakers said maintaining business confidence and creating a more supportive and predictable policy environment would be crucial to sustaining the recovery.
