“Improvements in exports, imports, inflation and remittances have helped stabilise foreign-currency reserves and supported the broader economy,” MCCI noted in its July-September 2025 economic review.
Early signs of economic recovery were visible in Bangladesh in Q1 FY26 despite overall sluggish growth due to prolonged political uncertainties and the spillover effects of tight monetary and fiscal policies implemented since 2024, the Metropolitan Chamber of Commerce and Industry, Dhaka, said.
The industrial sector continued to face strong headwinds; manufacturing weakened sharply as well.
The subdued environment stems from prolonged political uncertainties and the spillover effects of tight monetary and fiscal policies implemented since last year, which have significantly dampened domestic demand, MCCI noted.
“Even so, several sectors recorded year-on-year improvements during the quarter under review, supported by easing inflationary pressures and greater stability in the foreign exchange market,” the trade body said.
The industrial sector continued to face strong headwinds. While Q1 FY26 data is yet to be released, Q4 FY25 figures showed industry growth slowing to 4.1 per cent from 6.91 per cent in the previous quarter.
Manufacturing weakened sharply as well. Growth fell to 4.64 per cent in Q4 FY25 from 7.51 per cent in Q3, while its share in gross domestic product (GDP) slipped to 23.4 per cent, domestic media outlets reported citing the MCI document.
Exports during July-September FY26 rose by 5.25 per cent YoY to $12.27 billion, driven by knitwear and woven garments. However, export earnings in September fell by 5.10 per cent, raising concerns about winter-season orders. The sector remains exposed to weaker Western demand and evolving global sourcing trends. Imports grew by 9.49 per cent YoY during the quarter.
The central bank’s tight policy stance since August 2024 has further weighed on domestic demand, MCCI said. Private-sector credit growth fell to a historic low of 6.29 per cent in September 2025—far below last year’s 9.20 per cent and the central bank’s December 2025 target of 7.2 per cent.
Total domestic credit rose by 10.20 per cent in September 2025, driven largely by increased government borrowing. Public-sector credit surged by 24.45 per cent year on year (YoY), with net government borrowing alone rising 27.22 per cent. Despite weak private credit demand, banking-system liquidity remained ample.
A strong financial account surplus of over $1.6 billion-driven by trade credit and medium- and long-term loans-helped produce an overall balance of payments surplus of $853 million, reversing last year’s deficit.
Foreign exchange reserves improved significantly, reaching $31.43 billion in September 2025.
Despite these gains, inflation remained high at 8.36 per cent in September this year, with rural households facing greater pressure. Non-food inflation also stayed elevated at 8.98 per cent.
ALCHEMPro News Desk (DS)