Bangladesh GDP to Grow 5% in 2026 Amid Rising Price Pressures

Bangladesh’s economy is projected to grow around 5 percent in 2026, reflecting moderate expansion amid persistent structural challenges, according to the Economic Update & Outlook (January) released by the Planning Ministry.

The report by the General Economics Division (GED) of the Bangladesh Planning Commission highlighted that sustaining growth will require stronger governance, consistent policies, and increased investment in skills and technology to reduce dependence on the ready-made garment sector. These reforms are considered critical as Bangladesh nears graduation from least developed country status and navigates a democratic transition.

The GED noted that political stability, institutional reforms, and effective use of technology are essential to shift the economy from a low-cost labour model to higher value-added activities. However, uncertainties among economic elites and institutional weaknesses pose risks to long-term growth.

Progress towards the Sustainable Development Goals remains slow, and the report recommended evidence-based policymaking supported by local interventions to promote sustainable development outcomes.

Inflation remains a concern, with overall consumer prices rising to 8.49 percent in December 2025 from 8.29 percent in November, driven by food price increases. Food inflation rose to 7.71 percent, while non-food inflation remained high at 9.13 percent. Rice prices eased slightly but continued to weigh heavily on food inflation, while fish and dry fish became the largest contributors to rising food costs.

Wage growth lagged behind price increases, with nominal wages rising only marginally from 8.04 percent to 8.07 percent, widening the gap between income and living costs and putting pressure on household purchasing power.

According to provisional national accounts, real GDP growth in Q1 of FY2025-26 rose to 4.50 percent from 2.58 percent in the same quarter last year. Broad-based gains were seen across sectors: agriculture grew 2.3 percent after previous contraction, industry surged to 6.97 percent, and services rose to 3.67 percent, supported by transport, accommodation, and information services.

The share of agriculture in GDP declined to 9.84 percent, while industry’s share increased to 38.34 percent, signalling a gradual structural shift. Bank deposits grew steadily, and public sector credit expanded rapidly to 23.24 percent in November, while private sector credit growth remained modest at 6.58 percent.

The revised revenue target for FY2025-26 was set at Tk 554,000 crore. In December 2025, collections stood at Tk 36,191 crore, below the monthly target but improved year-on-year. The Revised Annual Development Programme was finalised at Tk 200,000 crore, down from Tk 230,000 crore, with allocations prioritising sectors with strong execution capacity.

Foreign exchange reserves strengthened to USD 33.19 billion in December, supported by robust remittance inflows of USD 3.22 billion. Export earnings stabilised at around USD 4 billion per month, dominated by the ready-made garment sector, while imports and capital machinery purchases reflected subdued private investment. The exchange rate remained broadly stable, with easing appreciation pressures in real effective terms.