Some success in trade deals, but key indicators unchanged

It would be unfair to judge the government solely by economic outcomes, as policy measures take time to produce results. But outcomes cannot be ignored either.

Government data on inflation, GDP growth, exports, investment, private-sector credit growth and ADP implementation show little improvement from the previous situation.

The BBS has not published employment data since 2024, but there is little evidence that job creation has improved. ADP implementation has declined over the past six months, private-sector credit growth has slowed and non-performing loans have increased.

The government cannot be held responsible for all these developments. It has taken some measures, but they have yet to produce better outcomes.

However, the government can be held directly responsible for high inflation. How much has it done to control inflation, including measures promised in its election manifesto? What steps has it taken to strengthen institutions?

Monetary policy has shifted from contractionary to expansionary. Quantitatively expansionary measures were introduced even before interest rates were cut. 

Non-performing institutions have again been given access to loans, while a Tk60,000 crore stimulus package has been introduced and interest rates reduced.

If these measures had followed successful efforts to contain inflation, it would have been clear that the economy was ready to shift its focus to growth.

The government could also have given Bangladesh Bank greater autonomy, but did not. The latest appointment of the governor instead highlighted how its autonomy has been undermined. As a result, many government decisions have not been forward-looking.

The government has presented a large budget with commitments to structural reforms, but implementation remains limited. Apart from introducing e-invoicing for VAT administration, few effective measures have been taken.

The budget also includes several deregulation commitments. The government is merging the PPP Authority with Bida, but this is hardly a major reform. Making the one-stop services of Bida, Beza, Bepza, the PPP Authority and the Hi-Tech Park Authority fully functional is more important. Operationalising the National Single Window is also crucial.

A cabinet task force has been formed to implement deregulation. However, some budget commitments will require amendments to existing laws.
The government has made some positive moves on trade. Signing a Cepa with South Korea is one of its notable achievements. Once ratified, it could help improve Bangladesh's poor record on free trade agreements. 

Bangladesh has also made progress in its trade ties with China. The government also deserves credit for resisting pressure to scrap the trade agreement with the US. If it was withdrawn unilaterally, garment exports could have come under significant pressure.

Overall, the past six months have brought little economic relief to people's lives. The government has introduced and expanded some social protection programmes, but their impact remains limited and marginal at the macroeconomic level.