Economic Outline

Economic Indicators

Bangladesh recorded one of the fastest growth rates in the world in the past few years, with stable economic performance that has helped to reduce poverty and social inequalities. However, the Bangladesh economy has faced numerous shocks, including disruptions stemming from Russia's conflict in Ukraine and global monetary tightening, which have disrupted a robust post-pandemic rebound: real GDP growth fell to 5.2% in FY24 due to weak consumption and exports and is expected to decline further to 4.0% in FY25 amid sluggish investment and industrial activity before rebounding to 5.5% in FY26 (World Bank).

The fiscal deficit was 4.5% of GDP in FY24. Revenue growth was robust but remained one of the lowest globally at 8.5% of GDP. Expenditure is estimated to have increased modestly to 13.0% of GDP, driven by current expenditure. The public debt to GDP ratio increased to 38.8% but remained sustainable. The fiscal deficit is projected to remain below 5.0% of GDP over the medium term. In the short term, total expenditure as a share of GDP is expected to decline due to contractionary fiscal policy. Over the medium to long term, strengthening revenue performance will be crucial to expanding investments in infrastructure and human capital (World Bank). Inflation remained high, averaging 9.7% in FY24, driven by elevated food and import prices. In response, the policy rate was increased by 100 basis points in FY25 to 9.5%, marking a cumulative rise of 425 basis points since May 2022. Bangladesh is one of the most vulnerable countries in the world to climate change, with extreme weather events estimated to have caused a loss of around 1.8% of GDP in the past few decades. The country has taken measures to promote green financing and is seeking grants from the international community, notably via the Green Climate Fund.

Despite a decline in overall unemployment (estimated at 4.5% in 2024), urban educated youth face rising joblessness as job creation stagnates in key industries like ready-made garments. Income inequality is also growing, with the Gini index rising from 0.50 to 0.53 between 2010 and 2022, particularly in urban areas. The informal sector is a very significant area of the economy and employment in Bangladesh, particularly for the less skilled people. Other social issues include constant social strikes, terrorist threats, and limited access to capital by the population.

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