Bangladesh’s economic outlook has taken a hit as the World Bank reduced its GDP growth forecast to 5.7% for the fiscal year 2024-25, citing rising inflation, food and fuel shortages, and financial sector vulnerabilities. The country’s inflation rate remains stubbornly high at around 10%, with food price inflation exceeding 10.5%. This has led to a severe cost-of-living crisis that is squeezing household consumption and raising production costs, further fueling inflation.
Inflationary pressure has prompted Bangladesh Bank to adopt a contractionary monetary policy. However, the effectiveness of this policy has been hampered by strict regulations on lending interest rates. Meanwhile, sluggish private-sector credit growth adds to the challenges. The banking sector remains unstable due to non-performing loans and tight liquidity, making it a crucial area of concern.
This inflationary surge is not only affecting domestic consumption but also industrial output, as businesses face higher energy and input costs. Import restrictions have further strained industrial production, causing stagnation in private investment
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