Economic activities in Bangladesh may experience a temporary slowdown as the government embarks on extensive economic reform initiatives, according to the Bangladesh Bank (BB).
In its July-September issue of the Bangladesh Bank Quarterly, the central bank emphasised that these reforms will ultimately benefit the economy in the medium and long term.
This announcement comes just two days after the World Bank projected a 4.1% growth in Bangladesh's economy for the fiscal year 2024-25, citing subdued investment and industrial activity amid escalating political uncertainty.
The central bank's publication acknowledged that the country is navigating a transitional phase with the establishment of the interim government, and a gradual return to economic normalcy is already underway.
Significant disruptions were noted across agriculture, industry, and services sectors, following the uprisings in July and August last year.
Additionally, repeated floods in several districts during August and September 2024 further impeded economic activities.
Despite these challenges, the BB highlighted a rebound in external demand, evident from robust export growth and substantial remittance inflows during the July-September quarter, signalling positive growth momentum for the upcoming quarters.
Inflation climbed to 9.92% in the first quarter of FY25, up from 9.72% in the previous quarter, reaching a record high of 11.66% in July 2024 due to supply chain disruptions from the nationwide student uprising.
The central bank noted that rising food prices were the primary contributor to inflation during this period.
Core inflation, excluding volatile items like food and fuel, also surged to 10.40% at the end of the July-September quarter, up from 8.32% in the preceding quarter.
To address persistent inflationary pressures, the BB has intensified its contractionary monetary policy.
The bank indicated that this tight monetary policy stance is likely to continue until there are clear signs of easing inflation.
BB also outlined its banking reform initiatives aimed at ensuring governance in the financial sector, which are expected to foster macroeconomic stability in the near future.
The external sector has started to recover, reflected in an improved current account balance, a stabilised exchange rate, and slower erosion of foreign exchange reserves, the bank added.
