[🇧🇩] Monitoring Bangladesh's Economy

Saif · Tuesday at 8:11 PM

GDP growth accelerates, led by industrial expansion

Economists welcome gains but say electricity, fuel, and slower services may limit overall performanc

www.thedailystar.net

GDP growth accelerates, led by industrial expansion

Economy grew 4.5% in the first quarter of FY26 compared with 2.58% a year earlier

By Rejaul Karim Byron and Ahsan Habib

Bangladesh's economy rebounded in the first quarter of the current fiscal year of 2025-26 due mainly to stronger agricultural and industrial production.

The overall output, or Gross Domestic Product (GDP), which measures the total value of goods and services produced in a given period grew by 4.50 percent in July-September, according to estimates from the Bangladesh Bureau of Statistics (BBS) released today.

This rate is higher than the 2.58 percent quarterly growth a year earlier.

The industrial sector led the expansion of the economy, posting 6.97 percent growth in the first quarter of FY26. The latest industrial growth is almost double the 3.59 percent recorded during the same period last year, when production was hit hard by mass uprisings and labour unrest.

Factory floors this year were noticeably busier compared with the corresponding quarter.

Agriculture, the largest employer in the economy, expanded by 2.3 percent, recovering from losses caused by repeated floods in 2024. The services sector, the country’s second-largest employer, also grew during the first quarter.

“This is an encouraging sign,” said Prof Mustafizur Rahman, distinguished fellow at local think tank Centre for Policy Dialogue (CPD). “The growth shows signs of recovery as the difference from last year is high.”

Rahman, however, said that this improvement is based on a low growth base from last year. And the growth in the service sector is not big, while agricultural output depends on the weather.

“There is a challenge in the sustainability of the growth,” said the economist.

Although the performance in the industrial sector was strong, export-oriented industries did not do well in the second quarter of the current fiscal year, which could have a negative impact, said Rahman.

Besides, imports of machinery and raw materials for export-oriented industries have not increased despite revived imports of capital machinery. “So, we have to wait to see whether this is a full recovery of the economy or not,” he added.

Zahid Hussain, another noted economist, described the overall recovery as “modest” compared with Bangladesh’s historical growth.

He said, “In the overall growth rate, a large contribution came from the agricultural sector.”

BBS data showed agricultural growth of 2.30 percent, up sharply from a negative 0.6 percent in the first quarter of the previous fiscal year.

Farming growth in the same quarter was also slight in 2023-24, at only 0.62 percent.

Last year, floods heavily affected Aus rice and Aman seedbeds, but this year production rebounded, said Hussain, a former lead economist at the World Bank’s Dhaka office.

Hussain said the sustainability of growth will depend on electricity supply and diesel availability.

According to him, while fuel imports are stable, electricity generation remains a concern. Investment remains lacklustre, and exports have slowed, adding to the challenges.

Historically, growth in the services sector ranges between 5 percent and 6 percent, higher than the current trend.

Disruptions from year-round street protests and a weak law and order situation have had a huge impact on services. High inflation has also reduced people’s purchasing power, limiting consumption of services, he added.

Headline inflation reached 8.49 percent in December, up from 8.29 percent in November and October’s 39-month low of 8.17 percent, according to BBS data.

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Saif · Wednesday at 7:25 PM

Bangladesh receives $1.59b in remittances in first 13 days of Jan

The upward trend in remittances sent by Bangladesh expatriates has continued in January, with receiving over US $1.59 billion in 13 days of the month. Bangladesh received $17.85 billion in inward remittances from July to January 13, 2026, in the current fiscal year, FY 2025-26. It was 14.7 billion

thefinancialexpress.com.bd

Bangladesh receives $1.59b in remittances in first 13 days of Jan

UNB
Published :
Jan 14, 2026 21:15
Updated :
Jan 14, 2026 21:15

The upward trend in remittances sent by Bangladesh expatriates has continued in January, with receiving over US $1.59 billion in 13 days of the month.

Bangladesh received $17.85 billion in inward remittances from July to January 13, 2026, in the current fiscal year, FY 2025-26. It was 14.7 billion in the same period of the previous FY2024-25, and saw a growth of 21.5 percent.

Blessings on the remittance, the gross forex reserves of Bangladesh cross $33 billion. As per the IMF standard BPM6, the forex reserves stood at $29 billion plus.

Arif Hossain Khan, Executive Director and spokesperson of Bangladesh Bank, confirmed that the expatriates have sent $1.59 billion in the first 13 days of January 2026, which was $926 million in the same period of January 2025. It means the remittance earnings grew by 71.8 percent in this time.

The growth is attributed to several factors, including incentives offered for sending money through legal banking channels, increased encouragement for using the formal system and the active role of exchange houses.

In FY2025-26, Bangladesh received $2.47 billion in remittances in July, $2.42 billion in August, $2.68 billion in September, $2.56 billion in October, $2.88 billion in November, and $3.22 billion in December.

The data revealed that the average inward remittance flow was over $2.42 billion in the last six months. This robust flow of remittance influences Bangladeshi policymakers to discourage lending from the IMF with tough conditions.

Saif · 2026-01-16T19:38:09-0500

Why does revenue stay low despite reforms?

Most people who file income tax returns in Bangladesh do so with a sense of anxiety rather than confidence. They worry about audits, paperwork and arbitrary decisions even as they try to follow the rules. That unease is not irrational because for decades the country's tax system has combined weak e

thefinancialexpress.com.bd

Why does revenue stay low despite reforms?

SYED MUHAMMED SHOWAIB
Published :
Jan 17, 2026 00:00
Updated :
Jan 17, 2026 00:00

Most people who file income tax returns in Bangladesh do so with a sense of anxiety rather than confidence. They worry about audits, paperwork and arbitrary decisions even as they try to follow the rules. That unease is not irrational because for decades the country's tax system has combined weak enforcement with wide discretion. While leaving honest taxpayers feeling vulnerable, this has also produced one of the lowest tax-to-GDP ratios in the world. In recognition of this problem and the need to improve it, policymakers have spent the past several years rolling out legal, institutional and technological reforms, opening up a rare opportunity to rethink how income tax actually works.

A foundational step was the replacement of the decades-old ordinance with a new Income Tax Act in 2023, which sought to modernise legal framework to align with contemporary economic realities. This was followed by the gradual move to mandatory online return submission under a self-assessment system. Most individual taxpayers now file through a digital platform that has reduced paperwork and curtailed many of the informal interactions that once defined tax compliance.

Digitalisation has also altered the way enforcement operates. Audit selection is now driven by centrally generated data rather than by the discretion of individual officers. Only those cases flagged by the system are called in for scrutiny which lowers the scope for arbitrary harassment and reduces compliance costs for those who try to stay within the rules. At the moment, the National Board of Revenue (NBR) is working to integrate information from the Central Depository Bangladesh Limited and banks so that data on capital market investments and interest income can be automatically reflected in tax returns, while digital Value Added Tax (VAT) filing is also on the way.

Yet this digital transition is not without significant gaps. The online platform does not allow the uploading of supporting documents at the time of filing even though salary figures and tax deducted at source of non-government employees remain outside the live data network. Taxpayers therefore have to declare key information in good faith while knowing that any later mismatch could trigger an audit and a demand to produce documents that the system itself never allowed them to submit in the first place. This also creates a deeper problem of enforceability. When taxpayers provide only minimal information about property in their online returns but later refuse to cooperate when verification is sought, tax officials are left without any reliable trail of information to trace their assets. Recording declarations without the supporting evidence clearly undermines the system's purpose instead of strengthening it.

Institutional reform has also been placed on the agenda post-July 2024 when the government moved to split the National Board of Revenue into two separate bodies under the Ministry of Finance, one responsible for revenue policy and the other for revenue management. The proposal triggered resistance from a section of officials who feared loss of authority under the new structure. Although the protests were eventually quelled, practical establishment of the two new entities remains pending due to unfinished procedural formalities, although completion remains a priority ahead of upcoming elections. The logic behind the separation is nevertheless sound. When the same authority both writes tax rules and enforces them, the temptation to issue special exemptions and tailor-made regulatory orders is high. Placing policy making and implementation in different hands can reduce that risk. Still, a cleaner institutional architecture on its own is neither a panacea for corruption nor will it solve the deeper problem of weak revenue mobilisation.

Each year the national budget grows larger and the revenue target for NBR rises with it, yet the gap between potential and actual collection persists. One major reason is the generous and often outdated web of tax exemptions. For example, the income tax exemption for software development, IT enabled services and related ICT activities was first introduced in July 2005 as a temporary stimulus but still in force today despite a very different economic reality. Two decades ago, the policy was justified by the hope that a dynamic domestic ICT industry would emerge, generating skills, innovation and globally competitive products. Regrettably, it has yielded scant evidence of success.

As of now, Bangladesh has not produced widely recognised homegrown ICT products or platforms that compete in international markets and most activity remains concentrated in importing and reselling hardware and software rather than creating original technology. Even limited domestic value addition has been scarce. This matters even more now that Bangladesh is set to graduate from the Least Developed Country category in November 2026, after which access to trade preferences will depend on stricter rules of origin that often require at least 50 per cent domestic value addition for non-apparel goods. A genuine ICT production base would have strengthened the country's position in that environment, but the tax break has mainly subsidised a trading business instead.

Similar scrutiny should apply to the deductibility of interest expenses from the taxable income of businesses, a rule that clearly favours debt over equity. Because interest payments reduce tax liability, companies are pushed towards borrowing even when it is neither necessary nor prudent. In an economy where banks are already weighed down by bad loans, this tax bias actively amplifies financial fragility rather than containing it. Highly indebted companies are more likely to fail during economic slowdowns while those financed with more equity can absorb shocks, making the current tax treatment of interest a risk to overall stability.

Emerging digital economies present another frontier for revenue mobilisation. Online businesses thrive with minimal formal oversight, often operating without physical premises and transacting via mobile wallets such as bKash, Nagad or cash-on-delivery. These channels evade routine scrutiny enabling significant concealment. As e-commerce expands, the revenue authority must adapt monitoring tools to capture these flows effectively.

None of this means that reform has stalled. Ongoing digital strides by the revenue body from online filings to mobile payments show a clear commitment to modernisation. However, complementing these with targeted reviews of unproductive incentives and enhanced oversight would only make tax system more effective, fair, and forward-looking than ever before.