Falling private sector credit growth has remained as the most worrying issue on the country鈥檚 economic front despite a rebound in deposit growth in banks, according to a government report released on Tuesday.
The report, however, expected a short-term economic boost on the back of election-related activities and expenditure during the run-up to the general elections slated for February 2026.
The private sector credit growth continued decelerating and slowed to 6.5 per cent at the end of August, said the report, the Economic Update and Outlook, released by the General Economics Division of the Planning Commission.
鈥楾his figure is a historic low and remained significantly below the central bank鈥檚 target,鈥� said the October 2025 report.
In its July-December monetary policy, the Bangladesh Bank has targeted 7.2 per cent private sector credit growth.
Noting that falling private investment signalled a deep-seated reluctance by businesses to invest and expand, the GED report said that the tendency was reducing job creation.
High interest rates, cautious lending, political and economic uncertainty were identified as key factors by the GED for persistent weaknesses that became complicated because of heavy reliance on bank borrowing by the government to meet its fiscal deficit.
The public sector credit growth reached 16.59 per cent year-on鈥搚ear in August.
The government鈥檚 heavy reliance on the banking system to cover its fiscal deficit continues to crowd out the private sector, leaving a little room for productive and private investment.
As the historic low in the private sector credit growth signals a serious challenge to future economic activity, the GED report said, stimulating the private sector is crucial for a sustainable and robust economic recovery.
The GED called for finding a balance between containing inflation and fostering an environment-friendly business growth.
Regarding the deposit growth in the banking sector that stood at 10.01 per cent in August, the report indicated a shift in public confidence, leading to a surge in deposits in healthy private banks.
The report also said that inflation edged up slightly to 8.36 per cent in September despite a fall in rice prices in August.
The overall export earnings in September slowed down to $3,627 million, $288 million less than the amount of $3,915 million in August.
But the stable flow of remittance of about $2,680 million in September on the back of favourable exchange rate balanced the slowing export and also continued to contribute to the steady recovery in foreign exchange reserves, said the GED report.
The report added that the rise of gross foreign exchange reserves to $31.4 billion in September from $25.5 billion in May reflected improved external sector stability and growing confidence in the economy.
It said that revenue growth gained pace on way to achieving a challenging target amid administrative reforms in the National Board of Revenue.
The government has recently formed two divisions for revenue sector, dissolving the NBR.
