Bangladesh GDP 1.81% in first quarter of FY26—lowest in four years

The country’s gross domestic product (GDP) growth has slowed to 3.69% in the fiscal year 2024-25, which is the lowest in the post-Covid period.

According to the Bangladesh Bureau of Statistics (BBS) report published on Thursday, the GDP growth in the first quarter of the current financial year, i.e. July to September, fell further to 1.81%—the lowest quarterly growth rate in the last four years.

Earlier, GDP growth fell to 0.93% during October-December of the 2020-21 financial year.

According to economists, stagnation in exports and investment, foreign exchange crisis, high inflation and slowdown in consumer spending — all have contributed to a slowdown in overall economic activity. This has also affected the growth under the Yunus regime.

Even though the economy is in the process of recovery in the post-Covid period, it has not been possible to maintain that momentum due to the recent pressure from the foreign sector, according to analysts. They feel that it will be difficult to achieve sustainable growth without increasing revenue collection, investment-friendly policies and diversifying the export sector.

The BBS will release detailed statistics on sector-wise growth soon.

Meanwhile, the World Bank has said that the GDP growth is expected to rise to 4.8% in FY26 from 4.0% in FY25 and to reach 6.3% in FY27.

Bangladesh is plunging into its most severe crisis in decades under the interim government of Nobel laureate Muhammad Yunus.

Inflation ravages household budgets, factories shutter their doors, and a banking sector crippled by defaults threatens systemic collapse. Families are fracturing under the weight of unemployment and debt, with over 2.1 million jobs lost in the first half of Yunus’ tenure alone—85% affecting women.

This is not mere misfortune; it is the direct fallout of policy paralysis, unchecked corruption, and a leadership more focused on political manoeuvring than economic revival.

The garment industry, the backbone of Bangladesh’s export-driven economy, exemplifies the decay. Contributing over 80% of exports and employing four million workers—mostly women—this sector has haemorrhaged vitality since Yunus took office. Between January 2024 and March 2025, 113 factories closed permanently, displacing 96,000 workers, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

From August 2024 to March 2025, an additional 69 closures wiped out 76,504 jobs, accelerating a trend of industrial flight. Wage protests, fueled by stagnant pay amid rising costs, led to the temporary shutdown of 183 factories in late 2024, including 54 in the Savar-Ashulia belt and 12 in Gazipur. Vandalism and arson, unchecked amid political unrest, exacerbated the chaos, with one fatal incident at a Beximco Group factory highlighting the human toll.

This has cascaded into broader unemployment: 60,000 workers lost jobs in the nine months ending June 2025, per labour unions, with youth—already comprising two-thirds of the NEET (not in employment, education, or training) demographic—bearing the brunt.

Inflation, another scourge, has eroded the purchasing power of ordinary Bangladeshis, turning daily necessities into luxuries. As of August 2025, the consumer price index stood at 8.29%, down slightly from 8.55% in July but still the highest in South Asia—surpassing India’s 5.5% and Pakistan’s 7.2%.

Food inflation, critical for a nation where 70% of the population spends over half their income on staples, hovers at 14%, driven by import dependencies and currency volatility.

The taka has depreciated 43% against the dollar since 2021, fueling a vicious cycle of higher import costs and squeezed remittances.

Yunus’ administration promised a tight monetary policy to tame prices, but experts like Mustafa K. Mujeri of the Bangladesh Institute of Development Studies decry the approach as overly restrictive, stifling growth without addressing root causes like supply chain bottlenecks. The World Bank warns that without bolder fiscal consolidation, inflation could push three million more into poverty by year-end.

The banking sector’s fragility compounds these woes, with non-performing loans (NPLs) ballooning to unprecedented levels. By March 2025, NPLs reached Tk420,335 crore ($35 billion), or 20.2% of total loans—the highest in Asia—up from 16.9% in September 2024.

Just ten banks, including state-owned Janata Bank and private lenders like Islami Bank, hold 71% of these bad debts, rooted in political interference and lax oversight under prior regimes but unaddressed by Yunus. By December 2024, NPLs neared Tk3.5 trillion ($82 billion equivalent at current rates), a 137% surge year-over-year, per Bangladesh Bank data.

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Collateral coverage is abysmal—some non-bank financial institutions secure just 15-20% of loans—exposing depositors to risk. Yunus’ much-touted reforms, including appointing Ahsan H. Mansur as central bank governor, have yielded little: default rates could hit 30% soon, per analysts, as recovery efforts falter amid borrower non-cooperation.

Macroeconomic indicators paint a grim portrait of stagnation. GDP growth plummeted to 3.9% in FY2025, the lowest in a decade, down from 5.8% in FY2023, according to World Bank estimates. Private investment, the engine of past booms, has cratered to 22.48% of GDP—a five-year low and far below the 28.2% target set in the 8th Five-Year Plan.

Credit growth to the private sector dipped to 7.15% in January 2025, the decade’s nadir, as high interest rates (repo at 10%) choke liquidity. Foreign direct investment (FDI) inflows, once averaging $2.92 billion annually, fell to $1.46 billion in 2024, deterred by political volatility and US tariffs rising to 35% on Bangladeshi imports.

The interim government’s hosting of investment summits has been performative, yielding C$2.9 billion in Chinese pledges but little concrete inflow, amid concerns over deepening Beijing ties.

This catastrophe stems not from inherited woes alone but from Yunus’ misrule. Appointed as a “reformer,” he has prioritised anti-corruption probes into Hasina-era figures—recovering just $17 billion of siphoned assets so far—while shielding allies from scrutiny.

Allegations swirl around Yunus’ inner circle, including unexplained wealth tied to central bank appointees, yet investigations stall. Policy negligence abounds: VAT hikes on 100 essentials have stoked inflation, while delayed elections (now eyed for late 2025 or 2026) breed uncertainty.

Economists like Mustafizur Rahman lambast the “stagnant” financial sector, where six months of reforms have yielded “almost no success.” Yunus’ surrender to radical elements has fueled violence, deterring investors and inflating production costs by 50%. As one analyst notes, “The economy has largely stagnated due to high inflation and slow financial growth.”

The human cost is heartbreaking. In Ashulia’s garment hubs, workers like Raimoni Bala, a 32-year-old seamstress, live in dread of layoffs, her family’s meals shrinking as rents soar. Graduates scour ads in vain, while NEET rates among young women hit two-thirds. Poverty could ensnare three million more by 2025, per the World Bank, widening inequality in a nation where the rich—often Yunus’ elite backers—thrive unscathed.