PMI Climbed to 62.2 in November

The private sector in Bangladesh is under pressure due to persistent inflation (over 9% since March 2023), high borrowing costs, and energy shortages. Private investment has stagnated at 24% of GDP, while FDI has hit a six-year low.

The interest rates on treasury bills in Bangladesh have dropped to 10-10.35% in February 2025, down from 11.97% in December 2024, driven by higher bank investment in government securities and a reduction in the government's borrowing target.

Yields on Bangladesh's government securities have sharply declined in February, with rates falling nearly two percentage points since December, reaching just over 10%. In the latest auctions, banks submitted bids significantly exceeding government targets—Tk22,389 crore for a Tk4,000 crore five-year bond and Tk8,072 crore for a Tk3,500 crore 91-day bill—forcing the central bank to lower rates to 10.47% and 10.35%, respectively.

The government has reduced its bank borrowing target by 28% to Tk 990 billion for FY2024-25, down from Tk 1,375 billion, due to lower expenditures and slow ADP implementation, which stood at 18% in the first half of the fiscal year.

Fitch Solutions forecasts Bangladesh’s inflation to average 8.5% in FY2024-25, exceeding Bangladesh Bank’s 7.0-8.0% target. Despite maintaining a 10% policy rate, inflation remains high due to political unrest and economic uncertainties.

Bangladesh’s Purchasing Manager Index (PMI) rose to 65.7 in January, up by four points from December, marking the fourth consecutive month of expansion. The growth was driven by the agriculture, construction, and services sectors, while manufacturing expanded at a slower pace.