GDP growth may face severe hurdles

The IMF projects Bangladesh's GDP growth at around 3.5 per cent for FY2026-27, well below the government's target of 6-6.5 per cent. Moreover, GDP growth has remained persistently weak in recent years. According to several indicators, it may not exceed 3.9 per cent in the coming years. If this trend continues, it could pose significant risks to the overall economy.
Inflation also remains stubbornly high, posing another major obstacle to economic growth. Export performance has likewise fallen short of expectations. Total exports declined by 0.58 per cent compared to the previous fiscal year and remained well below the target of US$56 billion. Although some export sectors recorded encouraging growth, the expansion of the ready-made garment (RMG) sector was modest in FY2025-26. Given that the RMG industry accounts for around 80 per cent of the country's total exports, its performance has a substantial impact on overall export earnings and GDP growth.
Meanwhile, ongoing geopolitical conflicts, intensifying competition in global export markets, inadequate utility services for manufacturing, and political instability have widened the imbalance in the balance of payments (BoP). Import costs continue to outpace export earnings, resulting in a larger trade deficit. Consequently, many industries are struggling to service their bank loans, while the volume of non-performing loans has reached record levels.
Against this backdrop, accelerating GDP growth has become a national priority. Bangladesh Bank has introduced various measures to curb loan defaults and provide much-needed support to industries facing severe challenges. If these initiatives are implemented effectively, they could strengthen the corporate sector and improve its resilience to future economic shocks. Successful execution of these reforms is essential to revitalise struggling industries, boost productivity, enhance export competitiveness, and ultimately place the economy back on a sustainable growth trajectory.

Kawsik Azad Pronoy
A Banker and Economic Analyst