Bangladesh economy shows resilience, future outlook turns positive

According to the Bangladesh Purchasing Managers' Index (PMI) for September, released by the Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka and Policy Exchange Bangladesh (PEB), the overall PMI stood at 48.6, reflecting a period of adjustment in economic activity.

The September PMI, released on October 7, showed that agriculture remained the key source of economic strength, while the Future Business Index indicated expansion across agriculture, manufacturing, construction and services.

The agriculture sector recorded its 13th consecutive month of expansion, with the sectoral PMI standing at 55.2. Although the pace of expansion moderated from August, new business, business activity and employment continued to grow, highlighting the sector's important role in supporting the broader economy.

The continued expansion in agriculture is particularly significant as it provides a stable foundation for economic activity and demonstrates the resilience of rural demand and production despite prevailing cost pressures.

The manufacturing sector recorded a PMI of 44.8 in September. While the sector experienced contraction during the month, employment returned to marginal expansion, indicating signs of resilience in the labour market and the potential for improvement as business conditions strengthen.

Construction recorded a PMI of 48.5, while services stood at 49.0. Both sectors remained close to the expansion threshold, suggesting that economic activity could regain momentum as demand conditions improve.

The services sector, in particular, recorded only a marginal contraction, indicating that the sector remains relatively close to returning to expansion.

Business feedback also pointed to several encouraging developments. A number of firms expressed expectations of improved activity in the coming months, supported by confirmed orders, reliable buyers and stronger seasonal demand during the approaching winter and peak business season.

The Future Business Index showed expansion across all four sectors, providing a positive signal about business confidence and expectations for the months ahead.

Businesses, however, continue to face challenges from higher fuel and oil prices, rising input and operating costs, weaker consumer purchasing power, energy supply constraints and limited access to financing. Addressing these challenges could help unlock stronger growth momentum across the economy.

The PMI findings suggest that Bangladesh's economy is currently going through a period of adjustment, while important areas of resilience remain visible. Continued agricultural expansion, the proximity of manufacturing, construction and services to the expansion threshold, and positive future business expectations provide a foundation for a gradual strengthening of economic activity.

Commenting on the September PMI, the report said Bangladesh's economic dynamism remains supported by agriculture's continued expansion, while positive expectations across all four sectors provide a basis for recovery.

It emphasised that strengthening domestic and export demand, ensuring reliable energy supplies, improving access to finance and containing cost pressures would help businesses expand activity and restore broader economic momentum.

The Bangladesh PMI is a pioneering initiative developed by MCCI and Policy Exchange Bangladesh, with support from the UK Government and technical assistance from the Singapore Institute of Purchasing & Materials Management (SIPMM). It provides timely insights into economic activity to support informed decisions by businesses, investors and policymakers, reports BSS.