High inflation, tight policy rate weigh on economic momentum in Q2 of FY26: MCCI

Bangladesh's economy showed mixed performance in the second quarter (October–December) of FY26, with high inflation and a tight monetary stance restraining overall momentum, according to a review by the Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka.

The review noted that growth remained modest during the quarter under review, weighed down by weak exports, subdued private investment, and continued credit tightening. 

Although macroeconomic stability showed gradual improvement, the recovery remained fragile, the MCCI added.

On a positive note, strong remittance inflows supported foreign exchange reserves and helped maintain overall balance of payments stability, despite a widening trade deficit, it said.

Agriculture

Latest available data show that agriculture employed about 44% of the country's total labour force and accounted for 9.84% of GDP in Q1 of FY26, down from 12.82% in Q4 of FY25, according to the review. 

Despite favourable natural conditions and government support through the timely provision of inputs and finance, the sector recorded a lower growth of 2.30% in Q1 of FY26 compared to 3.02% in the previous quarter, it added.

Industry

Data for the industry sector for Q2 of FY26 are yet to be published, the MCCI noted. However, it said, in Q1 of FY26, the sector posted higher growth of 6.97%, compared to 2.38% in Q4 of FY25.

The sector's share in GDP increased to 38.34% in Q1 of FY26 from 34.84% in the preceding quarter, marking a rise of 3.50 percentage points, the review mentioned.

Within the sector, manufacturing recorded 6.17% growth in Q1 of FY26, up from 3.37% in Q4 of FY25. The manufacturing sub-sector's share in GDP also rose to 25.41% from 23.31% over the same period, said the review.

Exports and imports

During July-December of FY26, exports declined by 0.54% to $24.40 billion, compared to $24.53 billion in the corresponding period of FY25.

The decline was largely driven by weaker performance in knitwear and woven garments. However, the apparel sector – comprising knitwear and woven garments – continued to dominate export earnings, accounting for 80.62% of total exports.

Export earnings in December 2025, the final month of the review period, fell 7.46% year-on-year.

On the import side, total import value (C&F) grew by 5.16% to $29.13 billion in July-November of FY26, up from $27.70 billion in the same period of FY25. Import payments in November 2025 increased 7.83% year-on-year.

Remittances

Workers' remittances in December 2025 stood at $3,224.27 million, registering a 22.19% increase compared to $2,638.78 million in December of the previous fiscal year.

In July-December of FY26, remittance inflows rose by 18.05% to $16,261.76 million, up from $13,775.88 million in the corresponding period of FY25.

The increase was attributed to various government measures, including higher cash incentives, streamlined regulations, and efforts to channel remittances through formal transfer systems.

Foreign direct investment

According to the latest balance of payments data from Bangladesh Bank, net FDI inflows in July–November of FY26 increased by 59.95% year-on-year to $651 million, from $407 million in the same period of FY25.

However, the MCCI noted that FDI inflows into Bangladesh remain low compared to many other countries at a similar stage of development.

Inflation

General inflation on a point-to-point basis (Base: 2021–22=100) rose further in December 2025, standing at 8.49%, up from 8.29% in November 2025.

In December 2024, inflation had been significantly higher at 10.89%. The government has set a target of keeping average inflation within 6.5% during FY26.

Data from the Bangladesh Bureau of Statistics (BBS) showed that both food and non-food inflation accelerated in December. Food inflation rose to 7.71% from 7.36% in November, while non-food inflation increased to 9.13% from 9.08%.

In December 2024, food and non-food inflation had stood at 12.92% and 9.26%, respectively.

Inflationary pressures intensified across regions in December. In urban areas, overall and food inflation rose to 8.55% and 7.87%, respectively, higher than rural rates of 8.48% and 7.67%.

However, non-food inflation was higher in rural areas at 9.26%, compared to 8.99% in urban areas.

The MCCI observed that while certain stability indicators improved during the quarter, elevated inflation and a tight policy rate continued to constrain investment and business activity, leaving the recovery path vulnerable.