The Bangladesh economy maintained a trajectory of broad stability during the first quarter of the 2026 fiscal year (Q1FY26). According to the latest quarterly report released by Bangladesh Bank, this resilience was anchored by a market-based exchange rate, a robust external sector, and a steadfast commitment to contractionary policy tightening.
Despite the lingering shadows of structural shocks and domestic political transitions, the central bank’s report suggests that prudent coordination between monetary and fiscal authorities has begun to restore macroeconomic equilibrium.
External Sector and Exchange Rate Equilibrium
The external sector emerged as a primary pillar of strength. While the trade deficit expanded to $5.7 billion, the current account deficit was kept in check at a modest $0.597 billion, largely due to the unwavering flow of remittances from the Bangladeshi diaspora.
Crucially, the financial account demonstrated significant vitality, recording net inflows of $1.7 billion. This surplus more than offset the current account gap. Furthermore, the nation maintained healthy access to international credit, securing $1.0 billion in net medium- and long-term external loans. Following the transition to a market-linked exchange rate regime, the Taka exhibited remarkable composure against the US Dollar, trading within a narrow corridor of Tk 121.80 to Tk 122.62.
Fiscal Prudence and Monetary Discipline
On the policy front, Bangladesh Bank has held its ground with a contractionary stance, maintaining the policy rate at 10%. This discipline is mirrored in the government’s fiscal performance, which recorded a surplus during the quarter—a rare feat driven by robust revenue collection and moderated public expenditure.
Macroeconomic Indicators: Q1FY26 Overview
| Indicator | Value / Status | Impact Analysis |
| Policy Rate | 10.0% | Sustained contractionary stance to curb inflation. |
| Trade Deficit | $5.7 Billion | Widened due to import demand; managed by inflows. |
| Financial Account | +$1.7 Billion | Strong surplus offsetting current account gaps. |
| Official Reserves | $31.43 Billion | Marginal decline due to valuation and liability cuts. |
| Gross NPL Ratio | 35.73% | Critical stress point for banking sector health. |
The Banking Sector: A Persistent Challenge
While the macroeconomic indicators provide cause for optimism, the internal health of the banking sector remains a significant concern. The gross Non-Performing Loan (NPL) ratio surged to 35.73% by September 2025. This escalation continues to erode profitability and deplete capital buffers across the financial system.
The central bank has reiterated its commitment to aggressive reforms, focusing on governance transparency and corrective measures to sanitise balance sheets. These efforts are deemed essential to ensure that the banking sector does not become a drag on the broader economic recovery.
Forward Outlook
The report concludes that the economy has navigated recent upheavals with notable competence. Although global trade volatility and domestic political nuances remain potential headwinds, the current foundation—built on exchange rate stability and fiscal discipline—provides a sturdy platform for the remainder of the fiscal year.