Bangladesh's economy in March presented a mixed picture, with easing food prices offering some relief while persistent non-food inflation, a widening revenue shortfall and slowing development spending continued to weigh on the overall outlook, according to the latest report by the General Economics Division (GED).
While a bumper rice harvest provided temporary relief to consumers, the broader macroeconomic landscape remains fraught with external vulnerabilities and domestic inefficiencies, it said.
The Economic Update and Outlook April 2026 published by the GED of the Planning Ministry said inflation moderated to 8.71% in March, down from 9.13% in February, largely driven by a decline in food inflation, which fell to 8.24%.
The "hero" of the month was rice, which saw inflation turn negative at -2.20%. This was fuelled by the arrival of the Boro harvest, increased imports, and government open-market sales. However, this relief was partially eroded by double-digit spikes in meat prices (15.11%) and continued pressure from fish and vegetables.
Conversely, non-food inflation remained "sticky" at 9.09%. Analysts point to a "pass-through effect" where high energy costs and currency depreciation have permanently baked higher prices into housing, transport, and utilities.
While the gap between inflation (8.71%) and wage growth (8.09%) narrowed slightly in March, the reality for the average household remains grim, according to the report.
Real incomes continue to erode as wage increases fail to keep pace with the cumulative cost of living. Household purchasing power remains under severe strain, leaving the population vulnerable to any renewed external shocks, it said.
The banking sector showed signs of resilience with total deposits reaching Tk 19,95,461.3 crore in February, an 11.28% year-on-year growth. However, the surge in public sector credit growth (29.61%) suggests the government is borrowing heavily from the banking system to fund its operations.
On the fiscal front, the National Board of Revenue (NBR) continues to struggle. In March, the NBR collected Tk 33,521 crore, missing its revised target by a staggering Tk 19,769 crore (a 37.10% shortfall). VAT collection, usually a reliable pillar, saw the largest deficit, falling Tk 11,527 crore short of expectations.
The Annual Development Programme (ADP) implementation has hit a roadblock. Total expenditure for the July-March period dropped from Tk. 82,894 crore last year to Tk. 75,607 crore this year.
The decline is particularly sharp in projects funded by foreign loans and grants, signalling procedural bottlenecks or shifting donor conditions. This slowdown in infrastructure spending threatens the long-term cyclical recovery of the economy.
The brightest spot in the March report is the surge in remittances, which hit US$3.76 billion, up from $3.30 billion the previous year. This influx has helped stabilise foreign exchange reserves, which stood at $34.12 billion in March.
However, the export sector is flashing red. Year-on-year export growth plummeted to -18.07% in March, with Ready-Made Garment (RMG) exports falling significantly. Rising global energy prices and domestic fuel hikes are making Bangladeshi goods less competitive on the world stage.
The Taka has followed divergent paths. While the bilateral rate against the US Dollar remained relatively stable at 122.62, the Real Effective Exchange Rate (REER) rose to 126.03, indicating that the Taka is depreciating in real terms against a basket of currencies. While this theoretically helps export competitiveness, it also increases the cost of vital imports.
The "March Moderation" appears to be a fragile equilibrium. The economy is currently leaning heavily on two pillars: the Boro rice harvest and migrant remittances.
With global commodity prices rising due to Persian Gulf tensions and a persistent domestic revenue gap, the government faces a narrow path.
Without structural reforms in revenue collection and a more efficient execution of development projects, the current stability may prove to be a temporary lull before renewed inflationary pressures. �"UNB
