Bangladesh’s economy faced significant challenges in the fourth quarter of the 2023-24 financial year, with issues such as inflation, shortfall in revenue collection, slow public expenditure, depreciation of the taka and declining foreign exchange reserves continuing to exert pressure, according to the Metropolitan Chamber of Commerce and Industry (MCCI), economic review.
The overall economic environment remained strained due to several factors, including political instability and social unrest.
The MCCI article titled “Review of Economic Situation in Bangladesh April-June 2024” said that one of the most pressing concerns was persistent high inflation.
The general inflation rate, although slightly reduced from 9.89% in May to 9.72% in June, remains alarmingly high.
The 12-month average inflation rate for FY24 stood at 9.73%, compared with that of 9.02% in FY23.
Food inflation slightly decreased to 10.42% in June from 10.76% in May. Meanwhile, non-food inflation marginally dropped to 9.15% from 9.19%.
Rural areas experienced higher inflation rates compared with urban ones, with general inflation in rural regions reaching 9.81% and non-food inflation 9.26% in June.
The economic review also said that between the end of FY23 and FY24, the Taka depreciated by 8.17% against the US dollar.
Foreign exchange reserves also saw a decline. The Bangladesh Bank’s gross foreign exchange reserves fell to $26.82 billion at the end of June 2024 from $31.20 billion in June 2023.
When adjusted to the Balance of Payments and International Investment Position Manual, 6th edition, reserves stood at $21.79 billion, down from $24.75 billion a year earlier.
The National Board of Revenue’s tax revenue collection grew by 14.86% to Tk324,378 crore in July-May of FY24 compared with that of Tk282,417 crore in the same period of FY23.
However, the revenue authority fell short by 20.88% of its revised target of Tk410,000 crore in FY24.
The industrial sector grew by 7.03% in the third quarter of FY24, but the data did not reflect the impact of the recent political turmoil.
Investment in the private sector remained sluggish. Private sector credit growth stood at 9.84% in June 2024, slightly below the central bank’s target of 9.8%.
Public sector credit growth also fell to 9.80%, significantly lower than the previous year’s 34.94%.
The gross inflow of foreign direct investment in July-May of FY24 decreased year-on-year by 6.50%, of which net FDI liabilities increased slightly year-on-year by 3.60%.
The services sector exhibited growth, with a 4.97% increase in the third quarter of FY24, up from 3.06% in the previous quarter.