GDP Growth Slows as Industrial Sector Takes a Hit

The Bangladeshi government has revised its FY25 GDP growth projection down to 5.25% from 6.75% due to ongoing financial challenges, political instability, and a business slowdown. Inflation, currently in double digits, is forecasted to ease slightly to 9% by the end of the fiscal year, despite an initial budget estimate of 6.5%.

The white paper on Bangladesh's economy reveals that the country’s GDP growth has been overstated since 1995, with significant inflation of estimates post-2012-13. The panel, led by Debapriya Bhattacharya, found that reported growth diverged notably from corrected growth, particularly after 2012.

Bangladesh's economy is gradually rebounding from domestic and global challenges, with improvements in foreign-exchange reserves and trade activity during the October-December quarter of FY25, according to the Metropolitan Chamber of Commerce and Industry (MCCI). However, its quarterly report for July-September FY25 warns of pressing issues, including high inflation, reduced external demand, sluggish public spending, and weak investment activity.

A local think tank has identified inflation, economic downturn, and rising poverty with inequality as the three major risks to Bangladesh's economy over the next two years. In a report presented on November 17, 2024, the Centre for Policy Dialogue (CPD) also outlined 17 obstacles to business expansion, including corruption, high tax rates, inefficient bureaucracy, foreign currency volatility, and limited access to finance.

According to the Asian Development Bank's Asia-Pacific Climate Report 2024, Bangladesh faces significant economic risks from climate change, potentially losing up to 16.2% of its GDP by 2070 due to factors like reduced labor productivity, sea-level rise, and river flooding. Rising temperatures could lower labor productivity across Asia by 18 percentage points, leading to high productivity losses in Bangladesh.