Bangladesh projects cautiously optimistic economic outlook for May-Jun

Economic recovery is expected to gain momentum, buoyed by favourable developments in the external sector, the May edition of the Economic Update and Outlook released by its general economics division said.

These include positive growth in exports and remittances, a stable exchange rate, easing inflationary pressures and steady improvements in bank deposits and private sector credit growth, a news agency reported.

While global economic growth remains stable, the document notes that domestic challenges, particularly political uncertainty and persistent inflation, may weigh on short-term prospects.

Prudent measures in the upcoming budget to ease inflationary impacts and bolster investor confidence will be crucial for sustaining recovery in the next fiscal, it noted.

Revenue collection continue to fall short of targets. However, recent structural reforms, including the dissolution of the National Board of Revenue (NBR) and its replacement by two new entities—the Revenue Policy Division and the Revenue Management Division under the ministry of finance—are expected to enhance the country’s revenue framework, the document pointed out.

The document reports a steady rise in foreign exchange reserves, reflecting a strengthened external position. Gross reserves rose from $25.8 billion in July 2024 to $27.4 billion in April 2025, while balance of payments manual 6 (BPM6) reserves climbed from $20.4 billion to $22 billion.

The government has cleared substantial payments for LNG, electricity and oil imports, further reinforcing reserve health.

Public sector borrowing from commercial banks surged to Taka 985.79 billion by mid-April 2025—a 60-per cent year-on-year increase—due to weak revenue collection and a suspension of central bank financing. The document said that this could crowd out credit access for the private sector.

Bangladesh’s external sector in April 2025 presented a mixed picture. Remittance inflows rose sharply—up by 35 per cent year on year—contributing to a projected narrowing of the current account deficit from 1.4 per cent of gross domestic product in fiscal 2023-24 to 0.9 per cent in fiscal 2024-25. This was attributed to rising remittances and a shrinking trade deficit.

However, exports declined, with April recording the lowest monthly figures of the fiscal at $3.01 billion—a modest 0.86-per cent growth. This drop was largely due to a slowdown in apparel shipments, the festival holidays, and uncertainty over the US administration’s reciprocal tariff policy.

Inflation showed a slight decline in April compared to March.

While the economy shows signs of recovery, sustained efforts in revenue generation, prudent fiscal management and targeted social protection will be vital to ensure macroeconomic stability and inclusive growth in future, the document added.

ALCHEMPro News Desk (DS)