The Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI), reports that three key economic indicators—imports, remittances, and foreign exchange reserves—are expected to improve in the first quarter of the current fiscal year, signaling positive changes in Bangladesh’s economy and external accounts.

According to the MCCI’s quarterly economic review, imports could reach $5.68 billion by September, rising from $5.51 billion in August and $5.39 billion in July. Remittances are also projected to grow, hitting $2.29 billion in September, up from $2.18 billion in August. Inflation, which soared to 11.66% in July, the highest in 13 years, is anticipated to ease in the following months.

“The Bangladesh economy is working to overcome challenges brought on by global conflicts, resulting in a mixed performance across selected economic indicators,” noted the MCCI.

The country’s foreign exchange reserves are expected to reach $27.95 billion by the end of September. However, the Export Promotion Bureau has withheld export statistics for three months starting in June, pending correction of data discrepancies.

In July, imports and remittances decreased due to a sluggish economy, while foreign exchange reserves dipped following a $1.42 billion payment to the Asian Clearing Union for May-June obligations. Despite these setbacks, the MCCI highlighted signs of recovery, particularly the increase in reserves and remittances in June.

Recent student protests over government job quotas have disrupted economic activities, and the MCCI stressed the need for improved logistics, banking services, and security to revive business.

The chamber also identified several ongoing challenges, including rising inflation, weakened remittance flows, lower public spending, a depreciating taka, and shrinking foreign exchange reserves. Additionally, the unemployment rate, low investment levels, and underdeveloped infrastructure continue to hamper growth.

While agricultural production benefited from favorable conditions and strong government support, the manufacturing sector is experiencing a slow recovery. Easing import restrictions, clearing a backlog of letters of credit, and introducing a crawling peg exchange rate system have boosted economic activity. However, the real estate sector remains sluggish due to high property costs and declining purchasing power.

Citing industry concerns, the MCCI highlighted rising construction costs driven by the devaluation of the taka, inflationary pressures, and increased labor and transportation expenses.

Foreign direct investment (FDI) also dropped by 6.5% year-on-year, with total inflows reaching $3.81 billion between July and May of the 2024-25 fiscal year. Despite Bangladesh’s low labor costs, foreign investors remain cautious due to underdeveloped infrastructure, inconsistent policies, energy shortages, and regulatory hurdles.

To attract more FDI and ensure sustained economic development, the MCCI urged the government to address these structural impediments and focus on long-term reforms.

Source: The Daily Star