Datanomics: Bangladesh at 55 - stagnation, inflation, and other issues

As Bangladesh marks its 56th Independence Day, slowing growth, rising inflation and a widening trade deficit underscore mounting economic challenges

Bangladesh will celebrate its 56th Independence Day on March 26. In July 2015, the World Bank classified it as transitioning from a lower-income country to a lower-middle-income one. However, for the past 2-3 years, the country has been experiencing lower growth rates, high inflation and stagnant export growth, along with a volatile political climate. The new government under Bangladesh Nationalist Party’s (BNP’s) Tarique Rahman has its work cut out.

 

Growth rate declining since FY22

 

Bangladesh’s gross domestic product (GDP), after a consistent rise from FY16 to FY19, saw a blip during the Covid pandemic in FY20. The growth rate rebounded in FY21 but has consistently declined since FY22, reaching 3.5 per cent in FY25. Per capita GNI has also been volatile since FY22. 

 

Price levels have doubled over a decade

 

In FY16, Bangladesh recorded an inflation rate of 5.92 per cent. It kept fluctuating while staying below 6 per cent till FY21. Rate of price change jumped from FY22 onwards, reaching over 10 per cent in FY25. 

 

Widening trade gap as exports dip

 

Bangladesh’s trade deficit rose gradually from $15.78 billion in FY16 to $50.62 bn in FY22, before dropping to $27.3 bn in FY24. Due to a decline in exports in FY25, the trade deficit widened again, reaching $38.19 bn in FY25.