Following the political upheavals of July and August, which led to a contraction in business activities, there has been a gradual recovery in the economy, with business expansion seeing a slight increase in January compared to December.
The Purchasing Managers' Index (PMI) for January rose by 0.4 points to reach 65.7, up from 61.7 in December.
This index, based on the views of executives from 400 companies across agriculture, construction, manufacturing, and services sectors, is a crucial indicator of economic performance.
Data on raw material purchases, product orders, and employment trends are gathered to calculate the PMI.
The PMI operates on a scale of 0 to 100, with values above 50 indicating economic expansion, and values below 50 signifying contraction.
A PMI of exactly 50 suggests no change in the sector's performance during that month. In July, the PMI plummeted to 36.9 points, but by August, it had recovered somewhat to 49.7 points.
The index then rose to 55.7 points in October, signalling a stabilisation of the economy.
Metropolitan Chamber of Commerce and Industry (MCCI), alongside the Policy Exchange of Bangladesh, has been jointly compiling the PMI for a year, with support from the UK Foreign, Commonwealth and Development Office (FCDO) and the Singapore Institute of Purchasing and Materials Management (SIPMM).
PMI for January reflects mixed performance across key sectors. While manufacturing saw a slight decline in output, agriculture, construction, and services sectors experienced some growth, contributing to a 4-point rise in the overall PMI.
Specifically, agriculture saw an improvement in its PMI, which reached 58.6 in January, up from 52.8 in December—an increase of 5.8 points in just one month.
In the services sector, the PMI surged by 6.4 points to 66.3, compared to 59.9 in December. Construction, despite some instability, recorded a rise to 63 points from 60.4 the previous month.
The highest PMI for the services sector was recorded in February of the previous year, at 79.6 points.
Since then, the sector has seen fluctuating performance.
On the other hand, the manufacturing sector's PMI dropped by 1.3 points to 68.5 in January. The sector reached its peak last May with a score of 76.3, driven by new purchase orders, exports, raw material imports, and factory production.
However, this momentum faltered as the sector faced challenges in January.
In summary, while challenges remain, the PMI's upward trajectory suggests that Bangladesh’s economy is beginning to regain its footing after the political turbulence of mid-2024.
