Bangladesh’s economy is grappling with a host of interconnected challenges, including sluggish growth amid high inflation, weak credit and investment flows, and persistent problems in the banking sector.

These issues were compounded by shortfalls in tax revenue and development spending, trade imbalances, declining foreign aid, low foreign direct investment, stock market volatility, currency depreciation, and unstable remittance inflows.

The latest economic review by the Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka, covering April to June 2025—the final quarter of financial year 2024-25—underscores these pressing issues.

While GDP growth edged up slightly to 4.86 per cent in the third quarter from 4.48 per cent in the previous quarter, the report highlights that overall economic momentum remains sluggish.

Inflation continues to pose a major concern, with the annual average rate holding steady at a high 10.03 per cent, despite a modest easing to 8.48 per cent in June.

According to the MCCI analysis, the sector credit growth had slowed, barely meeting the central bank’s modest target, while imports of capital machinery and overall investment levels had declined, thereby restraining the expansion of productive capacity.

The banking sector was said to remain burdened with regulatory shortcomings and widespread loan irregularities, which undermined financial governance and public confidence.

The MCCI report emphasised the urgent need for ongoing reforms to strengthen oversight and restore trust in the financial system, noting that such measures would be critical to ensuring long-term economic stability.

It was noted that the agriculture sector, which employed nearly 44 per cent of the labour force, had seen its contribution to GDP shrink from 11.68 per cent to 9.08 per cent, despite a slight improvement in growth rates.

This decline was said to highlight a structural challenge, as the sector’s reduced share in output indicated its diminishing role in the overall economic performance.

Meanwhile, the industry and manufacturing sectors had experienced slower growth, with industrial expansion dipping from 7.10 per cent to 6.91 per cent, and manufacturing growth easing from 8.49 per cent to 7.51 per cent.

The absence of updated data for the final quarter was reported to complicate timely analysis and policy responses.

Monetary indicators were reported to reflect subdued economic activity. Domestic credit growth had fallen sharply from 11.66 per cent to 7.86 per cent, while banks were holding excess liquidity of around Tk 265,766 crore, which pointed to weak credit demand or cautious lending behaviour.

The stock markets were said to have demonstrated volatility, with the Dhaka and Chittagong bourses ending a nine-session winning streak with declines, reflecting ongoing investor caution and lack of confidence.

The National Board of Revenue (NBR) had recorded a modest 2.23 per cent increase in tax collection to Tk 370,874 crore, but had fallen nearly 20 per cent short of the annual target.

This shortfall, coupled with a 20-year low implementation rate of 67.85 per cent in the Annual Development Programme (ADP), raised concerns about the government’s capacity to fund development initiatives and stimulate job creation.

On the external front, export earnings were reported to have grown by 8.58 per cent to $48.28 billion but remained below the targeted $50 billion.

Exports were said to have been volatile, with a 7.55 per cent year-on-year drop in June 2025 and a sharp 29.46 per cent decline from the previous month.

Imports had increased by 5.31 per cent, exacerbating pressures on the trade deficit. Foreign aid disbursement was reported to have fallen sharply by 16.63 per cent, negatively impacting numerous development projects.

Although foreign direct investment (FDI) had risen by 17 per cent to $1.58 billion, it was noted to remain low relative to peers at similar development stages.

The country’s balance of payments was said to have improved, with the current account deficit narrowing significantly to $432 million during July-May of FY25, compared to $6.12 billion the previous year.

However, the overall balance of payments still posted a deficit of $1.15 billion, albeit much reduced from the prior year’s shortfall. The Bangladeshi Taka was reported to have depreciated nearly 4 per cent against the US dollar over the fiscal year, compounding external vulnerabilities.

Finally, remittance inflows were said to have surged by 26.83 per cent to $30.33 billion for the fiscal year, driven by government measures such as enhanced cash incentives and streamlined regulations.

Nevertheless, monthly remittance flows were reported to have remained volatile, and female migrant workers continued to represent a small proportion of overseas employment.