GDP growth for FY25 slips to 3.49% as investment and demand weaken
Previously, based on preliminary data, the growth rate for FY2024–25 had been projected at 3.97%.
Bangladesh's economic growth slowed for a third consecutive year in the 2024-25 fiscal year, falling to 3.49% – the weakest performance since the immediate recovery from the Covid-19 pandemic.
The Bangladesh Bureau of Statistics published the final GDP figures on its website today (26 February), showing that the country's economic growth stood 48 basis points lower than the provisional estimate of 3.97% for the last fiscal year to June 2025.
Economists describe the slowdown as inevitable, noting that growth was stifled by mounting pressure from falling investment, contractionary monetary policy, and weakening domestic demand.
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The latest data show a steady deceleration in growth over three years. GDP growth stood at 7.10% in FY22 before falling to 5.78% in FY23 and 4.22% in FY24. During the height of the Covid-19 pandemic in FY20, growth had dropped to 3.45%.
The new reading suggests the economy is again hovering close to that low point.
According to the final BBS estimates, Bangladesh's GDP at current prices reached $456 billion in FY25, up from $450 billion in FY24. Per capita income rose to $2,769, after declining for two consecutive years.
Agri, service sectors slowed
Sectoral data show mixed trends, with agriculture and services slowing, while industry recorded a modest improvement compared with the previous year.
Agriculture grew by 2.42% in FY25, compared to 3.30% in the year before. The services sector's growth fell to 4.35% from 5.09% during the same period.
However, industries recorded 3.71% growth in FY25, slightly higher than the past year's 3.51%.
Investment, savings declined
The BBS data also show a broad weakening in investment and savings indicators.
In FY25, the investment-to-GDP ratio stood at 28.54%, down from 30.70% in FY24. The domestic savings-to-GDP ratio fell to 21.98% from 23.96%, while the national savings-to-GDP ratio declined to 27.67% from 28.42%.
Private investment dropped to 22.03% of GDP in FY25.
Per capita income rose to Tk334,511 ($2,769) from Tk304,102 ($2,738) in FY24. In nominal terms, this represents an increase of Tk30,409, or $31, year-on-year.
Slowdown not unexpected
Masrur Reaz, chairman and chief executive of Policy Exchange, said the slowdown, while concerning, was not surprising.
"For the past few years, Bangladesh's economy has been caught in a slow-growth cycle. The fall in GDP growth in FY25 is worrying but not unexpected," he said.
"Since FY2022-23, the economy has faced multiple challenges. High inflation and a decline in demand have reduced domestic output. At the same time, the central bank's high interest rates and contractionary monetary policy have reduced private sector loan demand and credit growth."
He added that the investment-to-GDP ratio has been declining steadily over the past few years. "This drop in growth is not surprising. High inflation, high interest rates and weak domestic demand have reduced output in industry and services, affecting overall economic output."
Masrur said the lack of new investment was another key factor. "Private sector investment has fallen to just 22% of GDP. The year following the political transition was also not supportive for the economic environment."
He noted that after August 2024, public investment also declined, with the Annual Development Programme reportedly at its lowest level in two decades. Law and order instability, protests, supply chain disruptions, and minor natural disasters also affected economic activity.
Disruptions in public administration and regulatory services further weighed on production and investment, he added.
"These four main factors – reduced domestic demand, high interest rates and falling credit growth, lack of new investment, and political and administrative instability – have together affected growth in FY2024-25. Overall, the final GDP figures reflect a slowdown that is quite normal and predictable under the circumstances," Masrur said.
'Economy in a sluggish phase'
Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development (InM), said the outlook was not encouraging.
"In terms of growth, the picture is not very positive. In FY2024-25 the economy was largely stagnant or sluggish," he said.
He explained that industry – particularly manufacturing – and services are the main drivers of growth. "Agriculture usually grows by only 2% to 3%; structurally it is a low-growth sector. Overall GDP growth mainly depends on industry and services. But sustaining and expanding these sectors requires large-scale investment."
He said both domestic and private investment had stagnated. "The private sector carries out most production activities, yet credit flow to this sector has fallen significantly. Recent data show private sector credit growth has dropped to around 6% to 6.5%, the lowest in several years."
Mujeri further said, "When investment falls, production does not increase, employment does not grow, and economic activities do not gain momentum. As a result, growth slows. Various economic indicators suggest the economy is currently going through a phase of stagnation, which is reflected in the GDP figures."
He noted that creating an investment-friendly environment was essential to reverse the trend. "To increase both domestic and foreign investment, policy stability, an environment of confidence, discipline in the financial sector, and stronger infrastructure support are needed."
He described this as a major challenge for the current government: how quickly it can restore momentum in the private sector. "If investment increases, production will rise, employment will grow, and overall economic growth will accelerate again," Mujeri added.
