Bangladesh's economy showing early signs of stabilisation: Economic outlook by Planning Commission

Bangladesh's economy is showing early signs of stabilisation despite ongoing structural challenges, according to the "Economic Update and Outlook: May 2025" released today by the General Economics Division (GED) of the Planning Commission.

The report highlights a continued decline in headline inflation alongside a strong rebound in export earnings in May, suggesting gradual improvements in macroeconomic indicators. However, the GED cautions that underlying vulnerabilities remain, particularly in the external sector and overall price dynamics.

Inflation drops to 9.05%, lowest in recent times

Headline inflation fell to 9.05% in May 2025, marking the lowest rate since the sharp post-COVID and war-related surges. The decline is largely attributed to easing food prices, supported by both demand and supply-side measures from the government, alongside relative stability in the foreign exchange market.

Food inflation, although still elevated, has softened. Rice continues to dominate as the largest contributor (40%) to food inflation, followed by fish (28%) and fruits (11.93%). While Boro paddy yields were expected to cool rice prices, the impact is yet to materialize significantly. Medium rice alone accounted for 20.46% of food inflation in May.

Price drops in items like potatoes (-13.3%) and hen (-3.87%) provided some relief. However, inflationary pressure persists from key non-food sectors, including housing (12.5%), clothing (10.4%), and transportation (6.9%).

External sector: Exports recover sharply in May

Bangladesh's external sector, which faced volatility earlier in the fiscal year, showed signs of resilience. Exports rebounded strongly in May, surging to $4.74 billion — the highest monthly figure in the fiscal year — following a seasonal dip in April due to Ramadan and Eid holidays.

The bounce-back underscores the adaptability of the export sector and strong external demand, despite ongoing global uncertainties.

Exchange rate: Taka depreciates but stabilises

The Bangladeshi Taka has depreciated notably against the US dollar over the past two years — from Tk108.96 in July 2023 to Tk122 in May 2025. Despite the depreciation, the exchange rate stabilized in mid-June, suggesting managed intervention by the authorities.

The Nominal Effective Exchange Rate (NEER) dropped from 76.54 to 68.23, reflecting a weakening Taka relative to trading partners. The Real Effective Exchange Rate (REER) remained within 98–105, pointing to some retained competitiveness due to inflation differentials.

Outlook: Cautious optimism amid persistent challenges

While inflationary pressures appear to be moderating and the external sector is regaining ground, policymakers remain cautious. The government's focus on inflation control, improved remittance flows, and export sector strength offers a path toward recovery, but structural reforms and sustained forex inflows remain critical to long-term stability.