Bangladesh at 'a critical juncture' despite regaining stability: Govt

The interim government has initiated steps to improve the macroeconomy hit by rising inflation, currency devaluation and falling foreign exchange reserves.

Though expansion of mobile financial services and e-commerce are positive signs, the economy is still facing challenges due to the limited reserves and strained investor confidence, the ‘Bangladesh State of the Economy 2025’ report by the general economics division under the Ministry of Planning noted.

Strengthening manufacturing sectors, boosting remittance inflows and investing in human capital would be the key to tackling looming vulnerabilities, especially inflation, financial instability, the weak investment climate, governance challenges and external risks, it remarked.

Inflation remains stubbornly high—8-9 per cent in fiscal 2024-25—driven by food price shocks, import cost pressures, energy costs and supply chain disruptions, and this reduces real incomes, primarily affecting low-income and rural households, said the report.

Foreign direct investment has been critically low, while the subdued investment and industrial activities contributed to slower growth.

Job creation, poverty reduction, and better living standards will largely depend on policy choices, including targeting inflation with accommodative monetary policy, reforming financial intermediation, implementing a more effective regulatory framework, improving governance, and promoting greater inclusiveness, the report noted.

Chronic low revenue mobilisation was identified by the report as the main obstacle for the government to raise public investment in education, health and human resources.

The report, however, found improvements in the overall debt management.

ALCHEMPro News Desk (DS)