Strong orders and output boost Bangladesh growth trajectory

Bangladesh’s economic momentum strengthened significantly in October 2025, driven by industrial resilience. The manufacturing Purchasing Managers’ Index (PMI) surged to 61.8, marking its highest reading in over a decade. This index reflects a rapid and broad-based expansion across key components, particularly new orders, production, and employment, signaling robust industrial activity throughout the economy.

Gross Domestic Product (GDP) growth for the third quarter is estimated strongly at 6.2% year-on-year (y/y), underpinned by multiple positive factors: strong textile exports, consistent remittance inflows (estimated at USD 31 billion YTD), and recovering domestic consumption. The structural driver of this growth remains the ready-made garment (RMG) sector, which is the nation’s economic cornerstone, accounting for roughly 12% of GDP and nearly 80% of total export revenue.

Mechanistically, this powerful rebound is catalyzed by a favorable combination of global demand for textiles, consistently competitive labor costs, and ongoing improvements in logistics infrastructure. Firms across industrial zones report rising capacity utilization, reaching approximately 82%, while employment in these zones has increased 3–4% y/y, which directly supports household income growth and domestic demand.

Monetary conditions remain moderately accommodative, with the Bangladesh Bank maintaining the key repo rate at 5.75% to ensure a sustained flow of credit to Small and Medium-sized Enterprises (SMEs) and critical exporters. Financial markets have responded positively: the Dhaka Stock Exchange benchmark DSEX has shown strength, with export-linked industrial and textile equities climbing 7% YTD, reflecting solid investor confidence in growth stability and reliable foreign exchange (FX) inflows.

The macro signal is highly significant: Bangladesh is demonstrating structural resilience despite global headwinds such as rising commodity prices and regional trade volatility. Forward-looking risks, however, require vigilance. These include persistent energy supply constraints (such as natural gas shortages), potential currency pressures (with the Bangladeshi Taka, BDT, trading near 107 per U.S. Dollar), and the risk of significant wage inflation which could erode export competitiveness. Monitoring PMI sub-indices, remittance inflows, and industrial output will provide early signals for Q4 performance.

If the current industrial momentum continues, annual GDP growth could reach the high end of projections at 6.0–6.3% for 2025, with exports contributing a major 2.3 percentage points and private consumption adding another 2.1 percentage points, ensuring a balanced recovery that supports both fiscal stability and external balances.