Industrial rebound lifts GDP growth in April-June

• GDP growth quickens, led by industry
• Agriculture, services slowed by political unrest
• FY25 growth weakest since Covid period
• Forecasts show only modest FY26 recovery

The country's economy expanded faster in April-June than in the same period a year earlier, buoyed by stronger industrial output and export performance. However, growth in agriculture and services remained subdued during the quarter, held back by political uncertainty and frequent street protests.

According to provisional estimates released by the Bangladesh Bureau of Statistics (BBS) yesterday, gross domestic product (GDP) grew by 3.35 percent in the fourth quarter of fiscal year (FY) 2024-25.

That compares with 2.14 percent growth in the same quarter a year earlier, indicating a recovery in overall economic activity. The industrial sector led the rebound, posting 4.10 percent growth, up from 1.08 percent in the corresponding period of the previous fiscal year.

By contrast, agriculture slowed to 3.01 percent from 4.11 percent, while services weakened to 2.96 percent from 3.61 percent.

"This overall growth was primarily driven by the industrial sector, with exports serving as the main engine behind it," said Zahid Hussain, former lead economist at the World Bank's Dhaka office.

According to BBS, GDP growth in the first three quarters of FY25 stood at 1.96 percent, 4.48 percent, and 4.86 percent. Based on all four quarters, overall GDP growth for FY25 at constant prices is estimated at 3.69 percent.

Hussain said industrial growth has consistently outperformed other sectors in recent quarters.

Even so, he noted that overall economic expansion has been disappointing compared with previous years.

Even though GDP growth this year is slightly better than the Covid period of FY20, it remains the lowest compared to FY21, FY22, FY23 and FY24, he said.

The economist described FY25 as "the most difficult year since the pandemic".

"In some ways, it has been even more difficult than Covid-19 because political uncertainty continued throughout the year," he added.

Unlike the pandemic, when lockdowns were temporary, the prolonged sense of insecurity badly affected the services sector. "When unrest continues on the streets, key service activities such as wholesale and retail trade and transport are hit the hardest," Hussain added.

He also referred to growth forecasts by multilateral agencies that suggest only a marginal improvement in FY26. "Most anticipate it will hover around five percent," he said.

On October 7, the World Bank projected that the Bangladesh economy would grow 4.8 percent in FY 2025-26, up from 4 percent in the previous fiscal year.

The Asian Development Bank (ADB) also forecast moderate expansion, projecting 5 percent growth in FY26, slightly lower than its April estimate.

The Manila-based lender said the country's growth prospects face headwinds from global trade shocks, persistent inflation, and domestic financial sector weaknesses.

Hussain said that the future outlook will depend on how both external and domestic risks unfold.

"Externally, we face risks linked to Trump-era tariffs and ongoing geopolitical tensions. But our bigger risks are internal. Street protests may have eased somewhat recently, but political uncertainty remains unresolved," he said.

He added that the absence of political consensus remains a major cause for concern. "If there is a smooth political transition, the economy will likely recover gradually. But if the transition is rocky, the recovery could falter."

Ashikur Rahman, principal economist at the Policy Research Institute of Bangladesh (PRI), said the economy would only regain momentum if the election restores public confidence in the democratic process.

"My projection for FY26 is timid as investors are holding back investments till the next election, and not much ADP implementation will happen after December," he said.