The General Economics Division (GED) of the Planning Commission has forecast a cautiously optimistic economic outlook for May and June 2025 supported by reform measures and a gradually stabilising macroeconomic environment.
In its latest Economic Update and Outlook released this month, the GED said the country’s economic recovery is expected to gain pace, backed by improvements in exports, remittance inflows, a stable exchange rate, and easing inflationary pressures.
Bank deposits and private sector credit growth have also shown steady progress, it added.
However, the report cautioned that domestic factors, particularly persistent inflation and political uncertainty, could dampen short-term prospects.
It stressed the need for prudent fiscal measures in the upcoming budget to ease inflationary pressures and strengthen investor confidence for a sustained recovery in the new fiscal year.
Although revenue collection remains below target, the GED expressed optimism that structural reforms would help improve the situation. It noted the recent dissolution of the National Board of Revenue (NBR) and the formation of two new bodies—the Revenue Policy Division and the Revenue Management Division—under the Ministry of Finance.
This restructuring, enacted through an Ordinance on May 12, followed recommendations by task forces from the Planning and Finance Ministries. It aims to resolve longstanding inefficiencies and promote evidence-based policymaking.
The GED also highlighted the introduction of a Medium- and Long-Term Revenue Strategy (MLTRS) for FY2025-26 to FY2034-35, which targets a tax-to-GDP ratio of 10.5% by FY2034-35.
The report recommends a critical review of past reform failures to ensure the success of the new strategy, noting that Bangladesh’s revenue-to-GDP ratio remains lower than that of many peer economies.
The Outlook reports a steady increase 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 BPM6 reserves climbed from $20.4 billion to $22.0 billion.
The government has cleared substantial payments for LNG, electricity, and oil imports, further reinforcing reserve health.
Although fluctuations occurred—such as a dip in November 2024 followed by recovery in December—these were attributed to temporary external inflow changes and valuation adjustments. The difference between gross and BPM6 reserves, typically $5–6 billion, represents non-reserve assets excluded under BPM6 accounting.
March 2025 saw an 8.51% year-on-year growth in aggregate bank deposits—the highest in nine months—driven by increased customer confidence and record remittance inflows. Private sector credit growth also rebounded to 7.57% in March from 6.82% in February, following a prolonged slowdown.
Public sector borrowing from commercial banks surged to BDT 985.79 billion by mid-April 2025—a 60% year-on-year increase—due to weak revenue collection and a suspension of central bank financing. The GED warns 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 35% year-on-year—contributing to a projected narrowing of the current account deficit from 1.4% of GDP in FY2024 to 0.9% in FY2025. This was attributed to rising remittances and a shrinking trade deficit.
However, exports declined, with April recording the lowest monthly figures of the fiscal year at $3.01 billion—a modest 0.86% growth. This drop was largely due to a slowdown in apparel shipments, the Eid al-Fitr holidays, and uncertainty over the U.S. administration’s reciprocal tariff policy.
Inflation showed a slight decline in April compared to March, mainly due to a decrease in food prices—especially rice and fish. The Outlook recommends maintaining strategic food reserves and strengthening targeted safety net programs such as school feeding initiatives, food-for-work schemes, open market sales, and employment guarantee programs. These measures are deemed essential, given fiscal constraints and the rising cost of food.
The GED underscores that while Bangladesh’s 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 the months ahead.
