Economy to get short-term boost as election nears: GED report

• Election buildup boosts Bangladesh economy confidence
• Private credit growth sinks to historic low
• Inflation steadies around eight percent mark
• Deposits rise on reforms, remittance inflow

Bangladesh's economy is expected to see a short-term boost in confidence as election-related activities gather pace, according to the Economic Update and Outlook for October 2025, prepared by the General Economics Division (GED).

However, private sector credit growth remains at historic lows despite easing inflation, the government report said.

The upcoming polls are expected to spur spending and investment sentiment among economic actors, it said.

Inflation, while still elevated, has shown signs of stability in recent months. After falling to 8.48 percent in June from 9.05 percent in May, it hovered around that level, edging up slightly to 8.36 percent in September from 8.29 percent in August.

The report flagged private sector credit as the most concerning aspect of the financial landscape.

Growth slowed to 6.35 percent at the end of August 2025 — a historic low and well below the central bank's targets.

The sustained weakness reflects businesses' reluctance to expand, driven by high interest rates, cautious lending, and political and economic uncertainty.

"This persistent slowdown directly translates into reduced investment and job creation," the GED noted.

The report said deposit growth showed a moderating but fluctuating trend in the early months of the current fiscal year (FY26), supported by reforms aimed at restoring public confidence.

Deposits grew 10.01 percent year-on-year at the end of August 2025, while broad money — a measure of money supply — expanded by 7.78 percent over the same period.

"The subdued deposit growth is primarily influenced by high inflation, which continues to erode real disposable income and limit the capacity for household savings."

However, reports indicate a shift in public confidence, leading to a surge in deposits in well-regarded private banks, even as overall systemic growth faces pressure.

Lower interest rates on Sanchayapatra (national savings certificates), alongside the expansion of e-money and agent banking, have made bank deposits more attractive.

Strong remittance inflows and the government's move to channel cash transfers through banks also contributed to the increase.