New Delhi, Nov 26 The Bangladesh economy has entered a fragile phase marked by a slowdown in growth, rising inflation, weakening investor confidence and a weakening banking system, according to a local media report.
The International Monetary Fund (IMF), in its October 2025 Country Report, identified three deep-seated vulnerabilities: persistently weak tax revenues, fundamental fragility in the financial sector and high inflation, the report in the Dhaka-based newspaper The Daily Star said.
In the last fiscal year (FY 2024–25), GDP growth slowed to 3.97 per cent, according to Bangladesh Bank's Economic Review (October 2025), far below the decade-long average of about 6 per cent.
Between 2006 and 2022, the poverty rate dropped from 41.5 per cent to 18.7 per cent, according to the World Bank Poverty & Equity Brief (April 2023).
However, now the poverty rate, based on the international $3/day threshold, is projected to rise to 8.9 per cent, pushing an estimated 1.2 million people into vulnerability, according to the World Bank Macro Poverty Outlook, October 2025.
Extreme poverty in Dhaka is forecast to rise to 9.3 per cent, likely affecting roughly 3 million people. Investor confidence has also deteriorated, The Daily Star report stated.
In March 2025, Moody's Investors Service downgraded Bangladesh's banking system outlook from stable to negative, citing elevated credit risks, deteriorating macroeconomic conditions, and political instability.
While headline inflation has eased marginally due to a fall in food prices, non-food inflation rose to 9.13 per cent in October 2025, up from 8.98 per cent in September. Living costs have continued to climb. House rents, transport fares and household essentials have become increasingly unaffordable, the report points out.
The employment rate dropped to 56.7 per cent in 2024, with job losses most visible in the service sector, according to the Labour Force Survey 2024 (preliminary) of BBS. Wage growth has stagnated, while inflation continues to erode purchasing power.
On the financial front, Bangladesh now holds the highest non-performing loan (NPL) ratio in Asia. According to the Asian Development Bank's Financial Stability Monitor (2025), NPLs rose to 20.2 per cent of total loans in 2024.
Non-bank financial institutions (NBFIs) have fared even worse, with bad loans increasing to 33.83 per cent and their Capital to Risk-Weighted Asset Ratio (CRAR) turning negative at 6.46 per cent, the report observes.
These figures indicate deep structural weaknesses in the financial system. Deposits have slowed, and many banks are struggling to meet reserve requirements, further restricting credit flow to the private sector.
According to the report, the ready-made garment sector, which has been the backbone of Bangladesh's exports, is also showing signs of strain.
Export earnings have declined for three consecutive months, according to Export Promotion Bureau (EPB) data: by 2.93 per cent in August, 4.61 per cent in September, and 7.43 per cent in October 2025. Woven garment exports dropped by 5.33 per cent, and knitwear exports fell by 10.76 per cent in October.
Industry insiders, including BGMEA and BKMEA, point to a range of factors: global tariff pressures, loss of competitiveness and the rise of China-backed African textile hubs, the report added.
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