Brief on Bangladesh’s Selected Economic Indicators, December 2024
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.
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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.