Issue 26

January 2026

Bangladesh’s economy enters 2026 in a state of uneasy calm—where acute crisis has been contained, yet recovery remains fragile and uneven. This Policy Insight situates the current moment within a broader arc of recent shocks: macroeconomic mismanagement, political upheaval, financial-sector distress, and an increasingly fragmented global trade and political environment. While external balances have improved and inflation has begun to ease, these gains have been achieved largely through compression—of imports, credit, and investment—rather than through renewed economic momentum.

This Special Edition addresses these challenges by providing a comprehensive, evidence-based assessment of stabilization and its trade-offs. It examines how monetary tightening, exchange-rate flexibility, and fiscal restraint have restored short-term stability, while also highlighting the costs for growth, job creation, and poverty reduction. Particular attention is paid to the banking sector crisis, weak investment dynamics, revenue constraints, and the risks of settling into a low-growth equilibrium. The analysis also places Bangladesh’s prospects in a shifting global trade and policy landscape, including LDC graduation and emerging protectionism.

By integrating macroeconomic analysis with sectoral and institutional perspectives, this issue aims to inform policy choices that move beyond crisis containment toward durable, inclusive, and investment-led growth.

Glossary of  Abbreviations and Acronyms

ADB – Asian Development Bank

ADP – Annual Development Programme

BB – Bangladesh Bank

BBS – Bangladesh Bureau of Statistics

BDT – Bangladeshi Taka

BoP / BOP – Balance of Payments

BPM6 – Balance of Payments and International Investment Position Manual, Sixth Edition (IMF standard)

CAD – Current Account Deficit

CPI – Consumer Price Index

ERD – Economic Relations Division

FE – Foreign Exchange

FOB – Free on Board

FY – Fiscal Year

GDP – Gross Domestic Product

IMED – Implementation Monitoring and Evaluation Division

IMF – International Monetary Fund

LC – Letter of Credit

LDC – Least Developed Country

MTMPS – Medium-Term Macroeconomic Policy Statement

NBFI  – Non-Bank Financial Institution

NPL  – Non-Performing Loan

PLC – Public Limited Company

PRI – Policy Research Institute (of Bangladesh)

REER – Real Effective Exchange Rate

RMG – Ready-Made Garments

RTA – Relative Tariff Advantage

SMART – Six Months Moving Average Rate of Treasury Bills

Tk – Taka (Bangladeshi currency unit)

USD  – United States Dollar

VAT – Value Added Tax

WEO – World Economic Outlook

WB – World Bank