Economic activities subdued in Q1, signs of recovery emerge: MCCI

Economic activities in Bangladesh remained subdued during the July–September 2025 quarter as prolonged political uncertainty continued to weigh on domestic demand and investment, according to a new report by the Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI).

The quarterly economic review, released yesterday, highlights that despite the overall slowdown, several key sectors showed year-on-year improvements supported by easing inflationary pressures and greater stability in the foreign exchange market.

The report notes that Bangladesh Bank's tight monetary and fiscal stance – implemented in August last year – further constrained domestic demand. This was reflected in private-sector credit growth, which fell to a historic low of 6.29% in September 2025, underscoring weak investment appetite and diminishing business confidence.

Citing Bangladesh Bureau of Statistics (BBS) data, the MCCI states that GDP growth dropped sharply to 3.35% in Q4, down from 4.86% in Q3 of FY25, indicating broad-based moderation across the economy.

However, the review also points to emerging signs of recovery in the first quarter of FY26. Improvements in exports, imports, inflation, and remittance inflows helped stabilise the country's foreign-currency reserves and provided some support to the broader macroeconomic environment.

Based on economic trends observed over the preceding nine months, the Chamber made projections for selected economic indicators for Q2 of FY26 (October–December). It noted that the economy is still grappling with the effects of political uncertainty and a volatile global context, resulting in a mixed performance across indicators.

Inflation dynamics showed a slight rebound, with general inflation rising by 0.07 percentage points to 8.36% in September 2025, up from 8.29% in August, mainly driven by price increases. A year earlier, in September 2024, the rate had been 9.92%.

Food inflation remained on a lower trajectory, inching up to 7.64% in September from 7.60% in August, while non-food inflation rose to 8.98% from 8.90%. In September 2024, food and non-food inflation had stood at 10.40% and 9.50%, respectively.

Inflation is projected to ease gradually through October, November, and December of FY26.

According to the Chamber's projections, exports and imports are expected to rise over the next three months. Remittance inflows may dip in July but are likely to increase in the subsequent two months. Foreign exchange reserves, however, may decrease in November due to Bangladesh settling $1.60 billion in import-payment obligations to Asian Clearing Union (ACU) member countries.

Meanwhile, foreign exchange reserves have increased in recent months. Bangladesh Bank's gross reserves reached $31.43 billion at the end of September 2025, up from $24.86 billion a year earlier. BPM6-compliant reserves stood at $26.60 billion, compared to $19.86 billion at the end of September 2024.

Export earnings during July–September of FY26 rose by 5.25% to $12.27 billion, up from $11.66 billion in the same period of FY25, driven largely by strong performances in knitwear and woven garments. These earnings accounted for 22.31% of the annual export target of $55 billion. However, earnings in September 2025 alone fell by 5.10%.

Remittance inflows also saw notable improvement. In September 2025, remittances totalled $2,685.88 million, an increase of 11.72% from $2,404.11 million in September 2024. Overall remittances for July–September of FY26 rose by 15.95% to $7,585.64 million, compared to $6,542.03 million in the same period of FY25, boosted by higher cash incentives, streamlined regulations, and efforts to strengthen formal transfer channels.