Economic growth in Bangladesh shows slight improvement

Bangladesh’s economy continues to experience fluctuations showing signs of acceleration one month and deceleration the next.

However, over the past two months, economic activity has been gaining pace.

While the rate of expansion increased slightly in September, it accelerated more noticeably in October.

The overall value of the Purchasing Managers’ Index (PMI) stood at 65.7 points in January. Over the next three months, the PMI consistently declined before showing mixed trends for the subsequent four months.

In September, the PMI rose by 0.8 points to reach 59.1 points and in October, it increased further by 2.7 points to 61.8 points.

The Metropolitan Chamber of Commerce and Industry (MCCI) and the research organisation Policy Exchange Bangladesh jointly compile the PMI. The results for October were published on Sunday.

The overall improvement in the PMI is attributed to accelerated expansion across four major sectors which are agribusiness, construction, manufacturing and services.

The index is prepared based on the opinions of executives from 400 private-sector enterprises operating in these key areas of the economy. Data are collected on aspects such as raw material purchases, new orders, production levels and employment. The PMI is measured on a scale from 0 to 100, where a reading above 50 indicates economic expansion, while a reading below 50 signifies contraction.

The manufacturing sector has sustained expansion for the past 13 consecutive months, with a slight increase in growth last month. The sub-indices for new orders, exports, raw material purchases, production, employment and product deliveries have all returned to expansionary territory. The manufacturing sector’s PMI stood at 65 points in September and rose to 66.1 points in October.

The construction sector, which had been in contraction for four consecutive months, returned to expansion in the following month. In October, the sector’s PMI increased further to 56.5 points. Indicators for new business, construction activity, employment and raw material purchases all reflected expansion.

Meanwhile, agribusiness returned to an expansionary trend in September, with the pace of growth strengthening in October. The agribusiness sector’s PMI reached 59.6 points in October, driven by improvements in new business, overall business activity and input cost indices.

The services sector has remained in expansion for 13 consecutive months, though its pace of growth has moderated compared to earlier periods.

Sub-indices for new business, business activity, employment and raw material purchases all continued to indicate expansion. The services sector’s PMI rose from 58.7 points in September to 61 points in October.

Policy Exchange Bangladesh’s Chairman and Chief Executive Officer (CEO), M. Masrur Reaz stated, “The October PMI results suggest that Bangladesh’s overall economy continues to expand, primarily driven by favourable crop conditions and expectations of strong agricultural yields. Other sectors of the economy also displayed faster rates of expansion as the year moved into its final quarter, while monthly export growth and inflation gradually eased.”