Dhaka: Bangladesh’s economic outlook for 2026 reflects a balance between moderate growth potential-estimated at around 5 percent-and persistent structural challenges with inflation expected to ease gradually, according to the Economic Update and Outlook (January) published by the Planning Ministry. The report, published by the General Economics Division (GED) of the Bangladesh Planning Commission, highlights the need for stronger governance, policy consistency, and increased investment in skills and technology to reduce over-reliance on the readymade garment sector.
According to United News of Bangladesh, these reforms are crucial as Bangladesh moves closer to graduating from least developed country status and navigates a democratic transition. The GED stressed that political stability, institutional reforms, and effective use of technology are essential to shift the economy from a low-cost labor model to higher value-added activities. It cautioned that uncertainty among economic elites and weaknesses in institutions remain major risks to long-term growth.
As progress towards the Sustainable Development Goals (SDGs) remains slow, the publication suggested that evidence-based policymaking, supported by village-level interventions, could help achieve sustainable development outcomes at the local level. General inflation rose further in December 2025 to 8.49 percent, driven by accelerating food prices amid persistently high non-food inflation. Food inflation increased from 7.36 percent to 7.71 percent, while non-food inflation remained elevated at 9.13 percent.
Rice inflation continued its downward trend, yet rice prices remained high, exerting significant pressure on overall food inflation. The contribution of rice to food inflation fell, while the contribution of fish and dry fish rose sharply, becoming the largest contributor to food inflation during the month. Vegetables exerted a strong disinflationary effect, and potato remained a major disinflationary factor.
Price inflation outpaced wage growth in December, indicating growing pressure on household purchasing power, as nominal wage growth failed to keep pace with rising prices. According to provisional quarterly national accounts estimates from the Bangladesh Bureau of Statistics (BBS), real economic growth in Q1 of FY2025-26 rose to 4.50 percent, up from 2.58 percent in the same quarter of the previous fiscal year.
Overall GDP growth at constant prices reached 3.72 percent in FY2024-25. Sectoral data showed broad-based improvement, with agricultural growth turning positive and industrial growth accelerating sharply. The share of agriculture in GDP declined, while the industrial sector’s share increased, indicating a gradual structural shift towards industry.
Bank deposits continued to grow, with public sector credit expanding rapidly, reflecting higher government borrowing. Private sector credit growth remained modest, indicating subdued private investment. For FY2025-26, the revised revenue target was set at Tk 554,000 crore, with December 2025 revenue collection falling short of the revised monthly target, although collections improved significantly compared to November and year-on-year.
The Revised Annual Development Programme (RADP) for FY2025-26 was finalized at Tk 200,000 crore, down from the original ADP, reflecting fiscal pressures and implementation performance. Despite the reduced allocation, the number of approved projects increased, indicating a broader but more tightly funded development programme.
Foreign exchange reserves strengthened, with gross reserves rising in December 2025. Remittance inflows grew robustly, supported by regulatory incentives and a favorable exchange rate regime. Export earnings showed signs of stabilization, with the ready-made garment sector remaining the dominant contributor. Import payments remained volatile, while capital machinery imports stayed subdued, reflecting weak private investment sentiment.
The exchange rate remained broadly stable in December, with easing appreciation pressures observed in real effective exchange rate (REER) terms.