The Bangladesh Bank’s December 2024 report highlights mixed trends in the country’s economic performance during FY25, indicating both recovery and challenges across various sectors.
Export Performance
• Strong Export Growth: Export earnings rebounded with an 11.66% year-on-year growth during July-November FY25. Total exports reached USD 24.53 billion during July-December FY25, marking a 12.84% increase.
• RMG Sector Dominance: The Ready-Made Garments (RMG) sector led this growth with a 13.28% rise, earning USD 19.9 billion.
Import Trends
• Decline in Imports: Merchandise import LC settlements fell by 1.04% during July-November FY25, reflecting cautious import behaviour amid economic challenges.
• Drop in Capital Machinery Imports: Capital machinery LC settlements declined sharply by 21.62%, with garment and textile machinery imports falling by 8.95% and 18.11%, respectively.
• Textile Inputs Surge: In contrast, textile and fabric import LC settlements increased by 15.50%, supporting the RMG sector’s robust export performance.
Remittance and Forex Reserves
• Strong Remittance Growth: Remittance inflows surged by 27.56% to USD 13.78 billion during July-December FY25, providing great support to the economy.
• Foreign Exchange Reserves: According to BPM6, gross reserves stood at USD 21.36 billion as of December 31, 2024, ensuring a moderate cushion against external shocks.
Current Account and Fiscal Position
• Improved Current Account Balance: The current account deficit narrowed significantly to USD 752 million during July-October FY25, down from USD 3,160 million in the same period of FY24.
• Tax Revenue Challenges: NBR tax revenue collection declined by 1.03%, achieving only 21.10% of the FY25 target, indicating fiscal stress.
Inflation and Credit Growth
• Rising Inflation: Headline inflation increased to 11.38% in November 2024, up from 10.87% in October, reflecting persistent price pressures.
• Public Sector Credit Growth Decline: Public sector credit growth dropped to 14.37% in October 2024, compared to 20.69% in October 2023, signalling reduced government borrowing.
GDP Growth Projection
• Moderate Growth Outlook: GDP growth for FY2023-24 is projected at 5.82%, reflecting a recovery from global and domestic economic headwinds.
Key Insights
- Export and Remittance Resilience: Strong export and remittance growth are the backbone of the economy, particularly driven by the RMG sector.
- Import Contraction: Declines in capital machinery imports may indicate cautious investment sentiment, potentially impacting future industrial growth.
- Fiscal and Inflationary Pressures: Rising inflation and falling tax revenues highlight challenges in maintaining fiscal discipline and managing living costs.
- Improved External Balance: The narrowing current account deficit and stable reserves offer relief in external sector management.
