Bangladesh: Economic and Political Overview
Bangladesh recorded one of the fastest growth rates in the world in the past few years, with stable economic performance that has helped to reduce poverty and social inequalities. However, the Bangladesh economy has faced numerous shocks, including disruptions stemming from Russia's conflict in Ukraine and global monetary tightening, which have disrupted a robust post-pandemic rebound: real GDP growth fell to 5.2% in FY24 due to weak consumption and exports and is expected to decline further to 4.0% in FY25 amid sluggish investment and industrial activity before rebounding to 5.5% in FY26 (World Bank).
The fiscal deficit was 4.5% of GDP in FY24. Revenue growth was robust but remained one of the lowest globally at 8.5% of GDP. Expenditure is estimated to have increased modestly to 13.0% of GDP, driven by current expenditure. The public debt to GDP ratio increased to 38.8% but remained sustainable. The fiscal deficit is projected to remain below 5.0% of GDP over the medium term. In the short term, total expenditure as a share of GDP is expected to decline due to contractionary fiscal policy. Over the medium to long term, strengthening revenue performance will be crucial to expanding investments in infrastructure and human capital (World Bank). Inflation remained high, averaging 9.7% in FY24, driven by elevated food and import prices. In response, the policy rate was increased by 100 basis points in FY25 to 9.5%, marking a cumulative rise of 425 basis points since May 2022. Bangladesh is one of the most vulnerable countries in the world to climate change, with extreme weather events estimated to have caused a loss of around 1.8% of GDP in the past few decades. The country has taken measures to promote green financing and is seeking grants from the international community, notably via the Green Climate Fund.
Despite a decline in overall unemployment (estimated at 4.5% in 2024), urban educated youth face rising joblessness as job creation stagnates in key industries like ready-made garments. Income inequality is also growing, with the Gini index rising from 0.50 to 0.53 between 2010 and 2022, particularly in urban areas. The informal sector is a very significant area of the economy and employment in Bangladesh, particularly for the less skilled people. Other social issues include constant social strikes, terrorist threats, and limited access to capital by the population.
| Main Indicators | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
| GDP (billions USD) | 451.53 | 451.47 | 481.86 | 540.62 | 591.94 |
| GDP (Constant Prices, Annual % Change) | 5.8 | 5.4 | 4.5 | 7.7 | 7.3 |
| GDP per Capita (USD) | 2,652 | 2,625 | 2,773 | 3,082 | 3,343 |
| General Government Gross Debt (in % of GDP) | 39.3 | 38.5 | 39.2 | 39.5 | 40.1 |
| Inflation Rate (%) | 9.0 | 9.7 | 10.7 | 5.6 | 5.0 |
| Current Account (billions USD) | -11.63 | -6.51 | -7.35 | -12.75 | -13.52 |
| Current Account (in % of GDP) | -2.6 | -1.4 | -1.5 | -2.4 | -2.3 |
Source: IMF – World Economic Outlook Database, October 2021
The Bangladeshi economy relies on its enormous human resources, rich agricultural soils, and abundant water resources. Agriculture represents 11% of GDP and employs 35.3% of the total workforce (World Bank, latest data available). Main crops include rice, tea, jute, wheat, sugarcane, tobacco, spices, and fruits. Bangladesh is the world's fourth-biggest rice producer, although shortages caused by natural disasters occasionally force the country to import rice. Jute, once the country's primary export crop, remains a significant contributor to the economy, although its importance has diminished over time. Cereal imports in Bangladesh are primarily wheat, which accounts for 80% of consumption, along with smaller amounts of rice and maize. For the 2024/25 marketing year, total cereal imports are forecast at 8.3 million tonnes, below average. Rice imports for 2025 are expected at 450,000 tonnes, wheat at 6.1 million tonnes, and maize at 2.1 million tonnes, driven by demand from livestock and fishing industries (FAO data).
Industry represents 34.6% of GDP and employs 20.9% of the total workforce (World Bank). The textile and garment industry is the cornerstone of Bangladesh's industrial economy, contributing significantly to export earnings and providing employment to millions of people, particularly women, across the country. The pharmaceutical sector has also witnessed notable growth, with Bangladesh emerging as a key player in the global generic drug market. Light manufacturing industries such as electronics, footwear, and plastics are gaining momentum, fueled by favourable government policies and increasing foreign investment. Industrial output in Bangladesh grew at its slowest pace since the COVID-19 pandemic, increasing by just 6.66% in fiscal year 2023 due to declining exports, import restrictions, and reduced domestic demand caused by persistent inflation (data Bangladesh Bureau of Statistics – BBS).
Services account for 51.1% of GDP and employ 43.8% of the total workforce (World Bank). Key sectors include telecommunications, banking and finance, transportation, and the burgeoning IT sector. Telecommunications has experienced remarkable growth, with widespread mobile phone penetration and increasing internet connectivity transforming communication networks across the country. The IT sector is emerging as a promising area, with a growing number of companies engaging in software development, outsourcing, and IT-enabled services. The services sector grew by 5.80% in FY24, with wholesale and retail trade, along with the repair of motor vehicles, motorcycles, and household goods, posting a growth of 6.19% (data BBS).
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 35.3 | 20.9 | 43.8 |
| Value Added (in % of GDP) | 11.0 | 34.6 | 51.1 |
| Value Added (Annual % Change) | 3.4 | 8.4 | 5.4 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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