Private sector credit growth in Bangladesh slumped to a record low of 6.49 percent in June, posing a critical challenge for the economy, according to the General Economics Division (GED).
In its monthly economic update for September, the GED cautioned that unless private credit growth recovers, economic activity and job creation will remain sluggish despite improvements in the country’s inflationary pressures, exports and forex reserves.
Against this backdrop, the GED has suggested that balancing monetary discipline with measures to stimulate private investment will be crucial for sustaining growth and job creation in the coming months.
Overall inflation fell to 8.29 percent in August, reaching its lowest level since July 2022, mainly due to a reduction in non-food inflation, which dropped below 9 percent for the first time in 20 months.
Food inflation remains high even though rice prices have decreased, contributing 48.37 percent of the food inflation in August compared to 51.55 percent in July.
The report also noted that the price of rice may fall further in coming months if there are no supply-side issues with the staple grain.
The government procured 1.82 million tonnes of food grains, including 1.72 million tonnes of rice, and allowed duty-free imports of another half-a-million tonnes to stabilise its price in local markets.
Besides, private traders resumed shipments through Benapole Land Port after a four-month hiatus, with about 5.74 lakh tonnes of rice distributed between July and September.
The GED expects these measures will help stabilise the rice market and ease food inflation.
However, the financial sector showed worrying trends as bank deposit growth slowed to 7.77 percent year-on-year in June, down from 9.25 percent a year earlier.
Similarly, overall credit growth dropped to 7.97 percent, with the GED attributing the decline to high interest rates, political and economic uncertainty, and cautious lending.
In contrast, public sector credit grew 13.09 percent thanks to increased government borrowing to cover fiscal gaps. The GED warned that this heavy reliance on public sector borrowing is crowding out the private sector and leaving little room for productive investment.
Meanwhile, export earnings continued to show resilience by crossing $4,000 million in several months, with peaks of about $4,627 million in December 2024, $4,737 million in May 2025, and $4,770 million in July 2025.
Furthermore, the foreign exchange reserves increased from $24.86 billion in September 2024 to $31.17 billion in August 2025, with BPM6-based reserves climbing from $19.86 billion to $26.17 billion over the same period.
The taka remained stable at Tk 121.6–121.99 per dollar between August 21 and September 16, while the Real Effective Exchange Rate fluctuated between Tk 124 and Tk 126.
The GED concluded that this steady performance supports investor and trader confidence and positions Bangladesh for sustained export-led growth.
Government revenue is also in an uptrend as the Tk 27,162 crore was collected in August, up 17.63 percent year-on-year. However, it is still Tk 3,727 crore short of the monthly target.
Import and export taxes declined by about Tk 2,416 crore while income and travel taxes fell by around Tk 1,730 crore.
Only VAT receipts at the local level exceeded the target, with an additional Tk 418.8 crore collected.
The GED described this growth as “optimistic yet a long way to run to achieve the target” for the fiscal year.
The report added that implementation of the Annual Development Programme (ADP) reached only 2.39 percent of the total allocation in July-August, down from 2.57 percent the year prior.
ADP utilisation improved modestly to 1.71 percent in August compared to 1.52 percent the year before.
The GED attributed the slow pace in ADP implementation to persistent challenges in timely fund release, bureaucratic delays, or lack of project execution capacity.
The report warned that this could lead to another year of back-loaded spending.
