GED urges new government to focus on economic stability

The General Economics Division (GED) of the Planning Commission of Bangladesh has expressed the hope that the new government will take prudent steps to ensure macroeconomic stability.

According to the latest Economic Update and Outlook of the GED, the government’s key priorities include attracting investment, generating employment, controlling inflation, and strengthening investor confidence.

The report also highlighted the importance of improving implementation of the Annual Development Programme (ADP), maintaining debt sustainability, and ensuring policy consistency to support long-term economic growth. It noted that the planned introduction of the government’s Family Card programme could be a step towards strengthening social protection and supporting vulnerable groups.

The report attributed the recent economic slowdown to weak project preparation, procurement delays, land disputes, and coordination challenges.

Despite domestic difficulties, Bangladesh’s external sector showed relative stability. Foreign exchange reserves stood at approximately $33.18 billion in January 2026, following a notable increase in December. Remittance inflows remained strong, reaching $3.17 billion in January, significantly higher than the $2.19 billion recorded in the same month last year. The GED expects remittances to rise further during Ramadan due to seasonal transfer patterns.

Merchandise exports also recorded growth, driven primarily by the ready-made garments (RMG) sector. RMG exports increased from $3.23 billion in December to $3.61 billion in January, while non-RMG exports rose to $798.9 million after a slight dip in December. However, imports of capital machinery remained low, indicating relatively weak private investment despite an overall rise in imports.

The report said Bangladesh’s inflationary pressures remained persistent at the start of 2026, with rising prices of fish, fruits, and vegetables continuing to push up food costs, while rice prices showed signs of easing.

Inflation edged up slightly to 8.58 per cent in January 2026, from 8.49 per cent in December 2025, reflecting continued pressure from food prices within the overall inflation structure, according to the GED’s Economic Update and Outlook for Thursday.

Food inflation rose to 8.29 per cent in January, up from 7.71 per cent in December, while non-food inflation moderated to 8.81 per cent from 9.13 per cent during the same period.

The report noted that food remained the largest contributor to overall inflation, accounting for 43.06 per cent of headline inflation in January, compared with 40 per cent in December. Housing and utilities contributed 15.05 per cent, while miscellaneous goods and services accounted for 9.31 per cent.

Despite some non-food items recording higher inflation rates, their lower weights in the consumer price index limited their impact on overall inflation.

Within the food basket, rice’s contribution to food inflation declined significantly in January as price growth slowed. The share of rice in food inflation fell from 37.34 per cent in December to 22.16 per cent in January, reflecting moderation across all rice varieties. Overall rice inflation fell to 7.61 per cent in January, down from 11.92 per cent in December, with medium, coarse, and fine rice all recording smaller price increases.

However, the reduction in rice-driven inflation was offset by rising prices of vegetables, fruits, and fish, keeping food inflation elevated. Vegetables, which had contributed negatively to inflation in December, turned positive in January, while fish and dried fish remained the largest contributors to food inflation. The GED attributed higher vegetable prices largely to increased transportation costs and excessive profit-taking by wholesalers and intermediaries, highlighting the need for better supply chain management of essential food items.

The report also cautioned that rising inflation combined with stagnant wage growth is putting pressure on household purchasing power. While inflation rose to 8.58 per cent in January, wage growth remained almost unchanged at 8.08 per cent, following 8.07 per cent in December. Since September 2025, inflation has consistently outpaced wage growth, creating a widening gap between price increases and income gains.

The GED emphasised the need for coordinated wage and price management to address growing pressure on living standards.

Meanwhile, the National Board of Revenue (NBR) recorded modest gains in revenue collection in January. Against a revised monthly target of Tk 52,545 crore, the NBR collected Tk 37,033 crore, leaving a shortfall of Tk 15,512 crore. Collections from import and export duties fell short by Tk 4,914 crore, domestic VAT by Tk 5,199 crore, and income and travel taxes by Tk 5,399 crore compared with the revised target. Overall, the NBR achieved 70.48 per cent of its January target.

Revenue collection increased only slightly from Tk 36,191 crore in December to Tk 37,033 crore in January, marking month-on-month growth of 2.3 per cent. On a year-on-year basis, revenue rose by 3.81 per cent compared with January 2025.

The report also highlighted weak implementation of the ADP in the current fiscal year. The GED noted that even with accelerated spending in the final months, FY2025-26 may record the lowest ADP implementation rate in recent years.