[🇧🇩] Monitoring Bangladesh's Economy

[Bilal9]

Industrial growth prospects in Bangladesh and India

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Even given the events of July 2024 in Bangladesh and the current economic trajectories, Bangladesh's industrialization is expected to continue strong growth driven by its established export-oriented manufacturing, especially in ready-made garments (RMG), as well as expanding sectors like ICT, pharmaceuticals, and light engineering.

Bangladesh has shown resilience and steady industrial growth, supported by major infrastructure projects such as the Padma Bridge and digital transformation initiatives.

India, on the other hand, has a larger and more diversified economy with significant growth in service sectors like IT, finance, and tourism, but its manufacturing sector has underperformed relative to expectations due to infrastructure bottlenecks, regulatory challenges, and slower industrial job creation.

India is focusing on reforms to accelerate industrialization, but the pace remains moderate.

Projections suggest:

• Bangladesh will maintain an average GDP growth rate of around 6.5% over the next decade, accelerating its industrial output and export capacity, which could lift it to the world's 25th largest economy by 2035.
• India’s economy will grow steadily, with industrialization supported by reforms and innovation, but challenges in manufacturing remain. India will likely continue to grow faster in services, making it the 3rd largest economy by 2030.

In summary, Bangladesh's industrialization is likely to do very well in the next ten years, potentially outpacing India in manufacturing sector growth rates and industrial export expansion due to its focused development model and demographic advantages.

However, India’s larger diversified economy and service sector growth will keep it far ahead in total economic size.

The two countries are pursuing somewhat different development models—Bangladesh through traditional export-led industrialization and India through service-oriented growth supplemented by industrial reforms.

Therefore, Bangladesh may largely outperform India in industrial growth percentage terms in the next decade, especially post-July 2024 events, but India’s overall economic scale and service sector will remain strong defining factors. This difference highlights Bangladesh’s rising industrialization success in South Asia amid evolving global economic conditions.

Given the events of July 2024 and current data, Bangladesh's industrialization is expected to grow at a faster pace than India's industrial sector over the next decade. Bangladesh's export-oriented manufacturing, especially in ready-made garments, along with expanding sectors such as ICT and pharmaceuticals, are driving steady industrial growth backed by infrastructure investments and digital transformation initiatives. It is projected to become the world's 25th largest economy by 2035 with robust industrial expansion.

India, although having a larger and more diversified economy, has experienced slower growth in manufacturing relative to expectations due to infrastructure and regulatory challenges. Its economic growth is more driven by services rather than manufacturing. India is working on reforms to boost its industrial base but may not match Bangladesh's high industrial growth rates in the near term.

In summary, Bangladesh is likely to outperform India in industrial sector growth rates and export expansion in the next ten years, especially after July 2024 events, but India will maintain larger overall economic size and service sector dominance.

The development models differ: Bangladesh focuses on traditional export-led industrialization, while India pursues service-led growth supplemented by industrial reforms.

This dynamic positions Bangladesh as a rising industrialization success in South Asia amid evolving global economic conditions.

 

[Bilal9]

As of 2025, Bangladesh's manufacturing-value-added as percent of GDP accounts for approximately 21.89% of its GDP, while India's is around 13%, and Pakistan's is about 10%. This indicates that Bangladesh has a much higher proportion of manufacturing contribution to its economy compared to both India and Pakistan as opposed to agriculture. This is a revolutionary change where Bangladesh was considered a backward agricultural country even two decades ago. The figure for Vietnam, Thailand, Malaysia and Indonesia are around 24%, 24%, 22.5% and 19% respectively.

ssti.org Trading Economics

For Bangladesh, still a long slog. Dilli door ast.

 

[Bilal9]

Bangladesh Vision 2041 (Vision '41) is a national strategic plan to further develop the socio-economic standing of Bangladesh, formulated by the National Economic Council. As a part of four 5-year perspective plans to be undertaken between 2022 and 2041, Bangladesh aims to achieve high income status through industrialization. The initiative encourages expansion of manufacturing capacity and investment in human capital development to develop exports.

Bangladesh Vision 2041 - Wikipedia

en.wikipedia.org

 

[Saif]

Dhaka, Ctg draw four-fifths of Jul-Sept remittances

Dhaka and Chattogram, two major divisions of Bangladesh, received 80 percent of the total remittance of the first quarter of fiscal year 2025-26, reflecting a regional disparity.

www.thedailystar.net

Dhaka, Ctg draw four-fifths of Jul-Sept remittances

Dhaka and Chattogram, two major divisions of Bangladesh, received 80 percent of the total remittance of the first quarter of fiscal year 2025-26, reflecting a regional disparity.

The remaining six divisions received only one-fifth of the $7.58 billion in remittances during the July-September period of the current year, according to the latest monthly report on workers' remittance inflows by Bangladesh Bank (BB).

During the period, the South Asian country, which is highly reliant on remittances to meet its external obligations, recorded a 16 percent year-on-year growth in inflows, rising from $6.54 billion in the same period a year ago.

Dhaka division received $4.22 billion during the July-September quarter of FY26, which was 33 percent higher year-on-year.

Chattogram division registered only a 5 percent growth in remittance inflows to $1.89 billion in the first three months of this fiscal year.

In other words, Dhaka accounted for more than half of the inflows, while Chattogram received one-fourth of total remittances, according to BB data.

Towfiqul Islam Khan, additional director (research) at the Centre for Policy Dialogue, said Dhaka and Chattogram have remained the main recipients of remittances for many years.

"People usually get jobs and go abroad based on family links. So, we see inflows are high in certain districts such as Madaripur and Noakhali," he said.

The BB data showed that during the first quarter of FY26, remittance inflows to all divisions except Dhaka and Chattogram declined. However, the share of remittance receipts increased only in Dhaka and Mymensingh.

Rangpur division received the lowest amount, followed by Mymensingh, Barishal and Rajshahi divisions during the July–September period.

Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank PLC, said the outflow of migrant workers is high from Chattogram. "But it appears that the beneficiaries of many migrant workers live in Dhaka," he said.

"Another possible reason could be the ticket size (the monetary value of a single transaction) of remittances. It may be that the average ticket size is higher in Dhaka than in other divisions," he added.

Mohammad Ali, managing director and CEO of Pubali Bank PLC, said mobile financial services (MFS) have become a medium for remittance transfers. "We transfer most of the remittances coming to our bank through mobile financial services," he said.

"This could be one reason," he added.

The BB data showed that Saudi Arabia, which employs more than 20 lakh Bangladeshi migrant workers, was the main source of remittances, followed by the United Kingdom, the United Arab Emirates, and Malaysia.

Migrant workers sent the highest amount of their earnings to Bangladesh through Islami Bank Bangladesh PLC.

The BB said in recent years, workers' remittance inflows have been crucial in enabling Bangladesh to maintain economic stability, particularly in the face of global economic uncertainties and domestic challenges.

"In the current political and economic landscape, marked by inflationary pressures, exchange rate fluctuations, and rising import costs, remittances have provided much-needed relief by bolstering foreign currency reserves and supporting millions of households across the country," it said.

The report said as a stabilising factor, the steady flow of remittances has been contributing to poverty reduction, improving living standards, and regional development.

"In the context of the ongoing post-pandemic economic recovery, coupled with political transitions, remittances are even more decisive in sustaining economic growth, ensuring liquidity in the banking sector, and reducing reliance on external borrowing," it said.

The BB, citing the Bureau of Manpower, Employment and Training (BMET), said 1.58 crore people have obtained BMET licences for overseas work from 1976 to September 2025.​

 

[Saif]

Paying heed to IMF's revenue warning

The persistent challenge of elevating revenue collection remains the central economic puzzle that Bangladesh has attempted to solve for many years. From enacting a new income tax law in 2023 to expanding and reorganising both the Income Tax wing and the Customs and VAT wing, the government has intr

thefinancialexpress.com.bd

Paying heed to IMF's revenue warning

Published :
Nov 15, 2025 22:57
Updated :

The persistent challenge of elevating revenue collection remains the central economic puzzle that Bangladesh has attempted to solve for many years. From enacting a new income tax law in 2023 to expanding and reorganising both the Income Tax wing and the Customs and VAT wing, the government has introduced a series of initiatives designed to strengthen the institutional capacity of the National Board of Revenue (NBR) and raise collections. These steps will require time before their impact becomes visible, yet the way the revenue system is currently functioning suggests that such manoeuvres may not be enough to address long-standing weaknesses. The government continues to face increasing expenditure pressures, and without meaningful improvements in revenue performance, it risks relying even more heavily on deficit financing. In this setting, the recent call by the International Monetary Fund (IMF) for Bangladesh to place far greater emphasis on revenue mobilisation serves as a timely reality check. The warning is clear that repeated failures in revenue performance will undermine the quality of public services and delay essential infrastructure building.

The revenue shortfall described by the IMF is already a recognised and alarming issue. It is a serious concern that Bangladesh now has one of the lowest tax-to-GDP ratios in the region at about 6.56 per cent, far below the Asia Pacific average of 19.5 per cent. At IMF's counsel, the government has begun separating policy formulation from enforcement within the NBR by splitting it into two divisions, a reform expected by December that aims to change the entrenched practices within the institution. While the principle of separating these functions to avoid conflicts of interest is conceptually sound, it may very well prove inadequate to address the fundamental weaknesses in revenue mobilisation. Without a substantial expansion of the tax base and improved collection efficiency, such incremental adjustments will be insufficient to escape a perilous fiscal trap the country is entangled with. The strain is visible in the government's diminished capacity to make essential investments in infrastructure and to respond decisively to the prolonged spell of high inflation. A government's ability to function well and invest in the future of its people depends entirely on its success in collecting taxes fairly and efficiently. When tax income falls this low, resources for critical spending shrink and borrowing becomes the only viable fallback.

Furthermore, as the IMF rightly noted, an underfunded treasury makes it nearly impossible to address the deep vulnerabilities within the banking sector. Recapitalising state-owned banks, reducing non-performing loans and improving financial governance are now a priority but they all require significant public money. Without these, the financial system continues to pose a latent threat to macroeconomic stability. The IMF's specific mention of strengthening anti-corruption measures and improving the Anti-Money Laundering framework is particularly telling. Corruption by a section of NBR officials and their willing partners among taxpayers is well known, and their actions have punctured the public purse from within and deprived the state of much needed revenue. Plugging this hole is essential for achieving collection targets and restoring public confidence that taxes are used responsibly.

The future of Bangladesh's economy depends on its ability to break free from the low-revenue trap. This is why the enhancement of revenue collection must be treated as a national responsibility rather than an external demand. Key measures must include expanding the tax net to encompass sectors with long-standing privileges and aggressively promoting digital systems for VAT and income tax to improve compliance and fairness. The IMF has warned that the window for meaningful action is narrow. Bangladesh should respond with the urgency this warning deserves and adopt measures that can lift the country out of its revenue constraints with resolute political commitment.​

 

[Saif]

No turning back on economic reforms

An elected government can use its mandate to finish unfinished tasks

www.thedailystar.net

No turning back on economic reforms
An elected government can use its mandate to finish unfinished tasks

VISUAL: STAR

Bangladesh is approaching a moment of political and economic reckoning. The upcoming general election, now twinned with a referendum on constitutional reforms, is expected to provide the incoming government with the mandate and momentum necessary to act swiftly on crucial and long-overdue matters, including the task of putting the economy firmly back on track. The International Monetary Fund's recent decision to pause a crucial review under the $5.5 billion loan programme, and engage with the "newly elected authorities," only reaffirms the importance of a smooth transition.

The economic anxieties, including stubbornly high inflation and flagging growth, are not cyclical hiccups but rather the consequence of past failures to address deep-seated vulnerabilities. The core demands of the IMF—a simpler, fairer tax system and urgent banking sector reforms—are precisely what the Awami League government long avoided. Following its ouster, the interim government has "made notable progress in maintaining macroeconomic stability," as the IMF has acknowledged. To ease external imbalances and contain inflation, the authorities tightened both fiscal and monetary policies. Importantly, foreign exchange reserves have begun to rebuild following the exchange rate reform launched in May. However, the economy "continues to face significant macro-financial challenges" stemming from weak tax revenue and undercapitalisation in the financial sector.

The next administration will understandably inherit these and other economic challenges. That's precisely why it must embrace necessary but often painful reforms to drive recovery. The political transition following the election must not become a pretext for delay. Bangladesh can no longer afford to postpone the difficult decisions required to clean up state-owned banks, implement tax reforms, and enforce strict monetary discipline. Economic complacency is exactly what the IMF cautions against, and any indulgence at this stage would be a costly mistake.

Bangladesh is required to act on three fronts. First, it must launch the ambitious tax reform demanded by the IMF, eliminating non-essential exemptions and subsidies. The new government must be ready to take on the powerful lobbies that thrive on tax loopholes. Generating more revenue means the state will be capable of expanding social safety nets and infrastructure, key requirements for inclusive growth. Second, the new leadership must take banking reforms forward. That requires political courage, as it will inevitably mean confronting powerful figures and vested interests. Finally, the central bank's independence in conducting monetary policy must be safeguarded. The transition period must not be allowed to undermine the recent progress made in adopting a flexible exchange rate regime.

Delayed or inadequate policy action in addressing fiscal and banking challenges would weaken growth, raise inflation, and increase macro-financial risks. Any success in these cases will be measured by the government's willingness to make hard, politically uncomfortable choices. It's a crucial test, one in which we must not fail.​

 

[Saif]

What's holding back growth of cashless transactions?

Digital financial transactions have increased by leaps and bounds over the past decade in Bangladesh, primarily driven by the impressive growth in the number of Mobile Financial Service (MFS) users. Estimates suggest that there are now more than 90 million active MFS users in the country, collectiv

thefinancialexpress.com.bd

What's holding back growth of cashless transactions?

Atiqul Kabir Tuhin
Published :
Nov 20, 2025 00:03

Digital financial transactions have increased by leaps and bounds over the past decade in Bangladesh, primarily driven by the impressive growth in the number of Mobile Financial Service (MFS) users. Estimates suggest that there are now more than 90 million active MFS users in the country, collectively conducting daily transactions worth nearly Tk 50 billion. With such rapid expansion in digital transaction, one would expect the dominance of cash to ebb gradually and the economy to move steadily towards a less-cash system.

However, the dominance of cash is showing no sign of abating. As the latest Bangladesh Payment Systems Report 2024 published by Bangladesh Bank reveals, although digital transactions - covering payments through mobile wallets, internet banking, and other electronic channels grew in volume in 2024, their share of total payments actually declined. The report shows that traditional, non-digital payments are now expanding faster than digital channels, while MFS are experiencing a drop in transactions.

According to the report, digital payments rose from 366.7 million transactions in December 2023 to 403.1 million a year later. However, their share of total payments dropped from 51 percent to 47 percent. In value terms, too, digital channels posted only marginal growth, increasing from Tk 751.4 billion to Tk 763.4 billion - a decline in share from 29 percent to 28 percent of total transaction value. In sharp contrast, non-digital payments expanded rapidly, growing 31.4 per cent in volume and capturing an even larger share of the total value.

This reversal underscores that a majority of people remain accustomed to traditional transaction systems, while it also reveals structural challenges within MFS that policymakers must address if the momentum towards a less-cash economy is to be sustained.

Bangladesh Bank attributes this trend to the increasing preference of MFS users for cash-out services over digital-to-digital transfers. This means that most users are relying on MFS primarily to send money from one place to another, rather than using their mobile wallets for day-to-day financial transactions. If users are increasingly withdrawing cash instead of keeping money within the digital ecosystem, the ambition of moving towards a cashless or less-cash economy is bound to falter.

This is particularly concerning at a time when policymakers have been emphasising the need to expand cashless systems, especially given that the country spends an estimated Tk 200 billion annually on cash management. This staggering expenditure covers the printing of currency, security, managing idle cash and operating ATM networks. Experts suggest that shifting towards a less-cash economy by expanding MFS usage and incentivising digital payments would significantly reduce these costs, and also enhance financial transparency.

In this regard, Bangladesh can take a leaf from neighbouring countries' playbooks on how they succeeded in popularising digital transactions. India's Unified Payments Interface (UPI), launched in 2016, has become one of the world's most successful real-time payment platforms, handling nearly 20 billion transactions a month with a transaction value approaching USD 290 billion. A key driver of India's success in popularising cashless transaction is that UPI offers completely free P2P transfers and most QR-based payments at zero cost, making digital payments more attractive than cash.

Sri Lanka, meanwhile, introduced its national QR standard, LankaQR, in 2018 and formally launched it in 2019 to promote interoperable, low-cost digital payments, including for feature-phone users. Pakistan's Raast platform, launched in 2022, offers free P2P transfers and has recently been supported by a government subsidy covering a portion of merchant QR transaction costs to accelerate adoption. These regional examples demonstrate the importance of cost-free transactions, interoperability, and government-supported incentives in driving mass adoption of digital payments.

Bangladesh's digital payments landscape is shaped largely by the dominance of MFS. Customers can receive funds free of cost, but cash withdrawals incur service charges. According to a study by Transparency International Bangladesh (TIB) Bangladesh has the highest MFS service charges among neighbouring countries. For instance, withdrawing Tk25,000 via bKash costs Tk372.5 to Tk462.5, compared to Tk355.7 in Pakistan (Easypaisa), Tk231.3 in Myanmar (Wave Pay), and no charge in India (Phone Pay).

Apart from high service charges, the universal Quick Response (QR) code payment system introduced by Bangladesh Bank, known as Bangla QR, is yet to gain popularity. Launched in January 2023, Bangla QR was designed to standardise QR-based payments across all banks and platforms. However, even nearly after three years, it remains absent from most storefronts. Many banks don't even have the updated mobile apps to support Bangla QR. Instead, stickers from mobile financial service providers like bKash and Nagad dominate the market, leaving the unified system struggling to gain a foothold.

The situation is similar for TakaPay, the local currency debit card introduced in late 2023 to reduce reliance on global payment networks such as Visa and Mastercard. Despite being the first of its kind, only eight banks currently offer it, and most consumers remain unaware of its existence.

Against this backdrop, experts argue that even if 5 per cent of Bangladesh's annual cash-management expenditure - estimated at around Tk 200 billion - were invested in promoting digital payments, the long-term economic gains would be substantial. Effective coordination among Bangladesh Bank, commercial banks, MFS operators and payment service providers is crucial to ensure seamless transfers from bank accounts to MFS wallets and to facilitate interoperability across all MFS platforms. Besides, Bangla QR and Taka Pay systems need to be promoted to increase digital payment system. Bangla QR and TakaPay also need stronger promotion to expand digital payment usage.

The authorities can begin by mandating the use of Bangla QR for all merchants and shops. Obtaining or renewing a trade licence could require displaying a valid QR code. QR codes may also be issued to all bank, MFS and PSP users to enable quick person-to-person transfers. In addition, QR-based payments can be integrated into government service platforms, including electricity bills and Metro Rail ticketing. Such measures would significantly boost public awareness, increase the use of digital transactions, and accelerate the country's transition towards a modern, transparent, and efficient digital economy.​

 

[Saif]

Governance failure stalls financial sector progress: BB governor

The governor speaks at Mastercard Excellence Awards 2025

www.thedailystar.net

Governance failure stalls financial sector progress: BB governor
The governor speaks at Mastercard Excellence Awards 2025

Bangladesh's financial sector has fallen short of expectations due to prolonged governance failure, weak regulatory enforcement and delayed reforms, despite commendable growth in the broader economy, Bangladesh Bank Governor Ahsan H Mansur said today.

He also described the sector's overall performance as "disappointingly behind", blaming structural weaknesses that remain largely unaddressed.

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The governor made the comments at the Mastercard Excellence Awards 2025 ceremony at the Radisson Blu Water Garden Hotel, Dhaka,

Eighteen institutions received a total of 33 awards under 19 categories in recognition of contributions to innovation, financial inclusion and digital transformation in the 2024-25 fiscal year.

The governor said that although the sector appears institutionally regulated, irregularities persist "underneath", owing to lax enforcement.

Referring to the local saying, which translates to 'hard on the outside, soft inside', he pointed to a disconnect between regulatory norms and operational practice.

"Regulations are stringent, but compliance mechanisms allow many irregularities to pass through. Without structural correction, the financial sector will continue to lag even as the economy expands," he said.

Mansur said that while Bangladesh's economy is now comparable in size to Singapore's, the financial sector remains "considerably narrow".

"The economy cannot fully reap the benefits of its size due to corruption, misallocation of assets and regulatory failures," he added.

He stressed that meaningful reform, rather than procedural adjustments, is essential to strengthen financial governance and reduce systemic inefficiencies.

The governor acknowledged recent steps by the central bank, including the removal of tax return submission and TIN requirements in card issuance, as well as the resolution of complications around purchasing international airline tickets via credit card.

"Customers can now buy tickets online as per their credit limit without it being counted in their annual foreign exchange quota. These are positive developments, but more substantive reforms are needed," he said.

Gautam Agarwal, president of Mastercard South Asia, said Bangladesh's financial transformation is underway despite the barriers.

According to him, the country has nearly 15 crore active mobile financial service accounts, internet usage stands at 70-74 percent, and annual remittance inflow totals $2.5-2.6 billion.

However, around 80 percent of transactions still rely on cash, which he termed a major obstacle to digitalisation.

"India underwent a similar journey. A little over a decade ago, only 2-5 percent of transactions there were digital; today it stands at 30-35 percent. Bangladesh is now positioned for similar transformation," he said.

Agarwal added that Mastercard has consistently invested in Bangladesh over the past 13 years, with a focus on financial inclusion alongside card services.

At today's awards ceremony, Mutual Trust Bank and Eastern Bank secured the highest number of recognitions, winning in four categories each.

City Bank, Islami Bank Bangladesh, United Commercial Bank and BRAC Bank received awards in three categories each, while Dhaka Bank won in two.

Single-category awards went to: Mercantile Bank, SSL Commerz, Al-Arafah Islami Bank, Prime Bank, AB Bank, Dutch-Bangla Bank, Southeast Bank, Pubali Bank, Pathao Pay, ACI Logistics (Shwapno) and bKash.

The seventh edition of the awards, held under the theme "Inspired by Future", also marked Mastercard's 13th year of operations in Bangladesh.

In his welcome address, Syed Mohammad Kamal, country manager for Mastercard Bangladesh, said the company has launched 30 new products in the past 12 months and is currently operated entirely by local professionals.

He noted that Mastercard operates in 222 countries and that four out of every five global fintech firms choose it as their strategic partner.

"Our security solutions prevented over $5 million in cyber threats in Bangladesh alone in recent months," he said.

The event was attended by Bangladesh Bank Deputy Governor Md Zakir Hossain Chowdhury, Mastercard Bangladesh Directors Zakia Sultana and Sohel Alim, senior officials of leading banks, fintech organisations, representatives from the diplomatic community and corporate executives.​