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Economic Review: Q1 FY2025-26 Analysis Through the Sustainable Development Goals Framework

Executive Summary

An assessment of Bangladesh’s economic situation for the July–September quarter of fiscal year 2025-26 reveals a subdued domestic environment, posing challenges to the achievement of several Sustainable Development Goals (SDGs). While external sector improvements offer some stability, tight monetary policy, political uncertainties, and structural impediments have dampened domestic demand and investment. This report analyzes these economic trends in the context of SDG 8 (Decent Work and Economic Growth), SDG 9 (Industry, Innovation, and Infrastructure), SDG 10 (Reduced Inequalities), and SDG 16 (Peace, Justice, and Strong Institutions).

Challenges to SDG 8: Decent Work and Economic Growth

The nation’s progress towards robust and inclusive economic growth faced significant headwinds during the review period. A tight monetary and fiscal stance, implemented to control inflation, has constrained domestic economic activity.

• Subdued Economic Activity: Overall economic activities remained weak, characterized by lower domestic demand and reduced investment appetite.
• Private Sector Credit Growth: Growth in private-sector credit reached a historic low of 6.29 percent in September 2025, indicating fading business confidence and a significant barrier to achieving SDG 8 targets related to productive employment and enterprise development.
• GDP Growth: Economic growth slowed to 3.35 percent in the fourth quarter of the preceding fiscal year (FY25), down from 4.86 percent in the third quarter, although recent data suggests some signs of recovery.

Inflationary Pressures and Impact on SDG 10: Reduced Inequalities

While inflation has shown signs of moderation, its sustained high levels continue to impact social equity, particularly affecting vulnerable populations and widening the urban-rural divide, a key concern for SDG 10.

• Inflation Trend: After remaining above 9 percent from March 2023 to May 2025, inflation moderated to 8.17 percent in October 2025. Projections indicate a further decline to 8.05 percent by December.
• Rural Disparity: The inflation rate in rural Bangladesh was higher than in urban areas in September 2025, making village life costlier and exacerbating inequalities. This trend directly undermines efforts to ensure equitable resource distribution.

External Sector Performance and SDG 17: Partnerships for the Goals

The external sector demonstrated resilience, contributing to macroeconomic stability and reflecting engagement with global partnerships.

• Trade Growth: Both exports and imports increased during the July–September 2025 period, largely driven by strong performance in the knitwear and woven garments sectors.
• Remittances and Reserves: An increased inflow of remittances and relatively stable foreign exchange reserves are forecast for the October–December quarter, supporting the broader economy.

Impediments to SDG 9: Industry, Innovation, and Infrastructure

The attraction of Foreign Direct Investment (FDI), crucial for developing resilient infrastructure and fostering sustainable industrialization under SDG 9, remains hampered by significant structural weaknesses.

Key Barriers to FDI

1. Infrastructure Deficits: Underdeveloped infrastructure, including energy shortages and weak transmission capabilities, deters foreign investors despite low labour costs.
2. Land Scarcity: A scarcity of available industrial land presents a physical constraint to new investment.

Institutional Framework and SDG 16: Peace, Justice, and Strong Institutions

The report highlights that achieving sustainable development is contingent upon strengthening governance and institutional quality, which is central to SDG 16. The following issues were identified as major impediments to investment and economic progress:

• Lack of consistency in policy and regulatory frameworks.
• Corruption.
• Non-transparent and uneven application of rules and regulations.

Addressing these institutional challenges is imperative to attract FDI and ensure the country’s long-term, sustainable economic development.

Analysis of SDGs, Targets, and Indicators

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 8: Decent Work and Economic Growth
• SDG 9: Industry, Innovation and Infrastructure
• SDG 10: Reduced Inequalities
• SDG 16: Peace, Justice and Strong Institutions

2. What specific targets under those SDGs can be identified based on the article’s content?

1. SDG 8: Decent Work and Economic Growth

   • Target 8.1: Sustain per capita economic growth. The article directly addresses this by reporting on Bangladesh’s “subdued” economic activities and “slow economic growth at 3.35 percent in the fourth quarter of the last FY25.” This highlights the challenge of achieving and sustaining high growth rates.
   • Target 8.3: Promote development-oriented policies that support productive activities… including through access to financial services. The article discusses the central bank’s “tight monetary and fiscal stance” and its impact on the economy. Furthermore, it notes that “private-sector credit growth declined to a historic low of 6.29 percent,” which points to challenges in accessing financial services for businesses, thereby hindering productive activities and investment.

2. SDG 9: Industry, Innovation and Infrastructure

   • Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure… to support economic development. The article explicitly identifies “underdeveloped infrastructure” as a major reason why foreign investors “hesitate to make fresh investments.” It further specifies “Shortages of energy and weak transmission infrastructure” as key impediments, directly linking infrastructure quality to economic development.
   • Target 9.a: Facilitate sustainable and resilient infrastructure development in developing countries. The article discusses the need to attract more Foreign Direct Investment (FDI) to address infrastructure gaps. It states that the government needs to address impediments like poor infrastructure “to attract more FDI to the country and ensure the country’s economic development.”

3. SDG 10: Reduced Inequalities

   • Target 10.2: Empower and promote the social, economic and political inclusion of all. The article points to a growing economic disparity between rural and urban areas. It states, “Living in villages has become costlier in recent times, as the inflation rate in rural Bangladesh in September 2025 was higher than in urban areas.” This highlights an inequality in the economic burden faced by different segments of the population.

4. SDG 16: Peace, Justice and Strong Institutions

   • Target 16.5: Substantially reduce corruption and bribery in all their forms. The article lists “corruption” as one of the primary impediments discouraging foreign investment and hindering economic progress.
   • Target 16.6: Develop effective, accountable and transparent institutions at all levels. This target is addressed by the article’s mention of “lack of consistency in policy and regulatory frameworks” and “non-transparent and uneven application of rules and regulations” as significant barriers to investment. These issues point to a need for more effective and transparent institutions to build business confidence.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. Indicators for SDG 8

   • Annual growth rate of real GDP: The article provides a specific figure for quarterly economic growth: “3.35 percent in the fourth quarter of the last FY25.” This is a direct indicator for Target 8.1.
   • Private-sector credit growth: The article states that this “declined to a historic low of 6.29 percent.” This figure serves as a proxy indicator for access to financial services under Target 8.3.
   • Inflation rate: The article provides several data points for inflation, such as “above 9 percent from March 2023 to May 2025” and a more recent figure of “8.17 percent” in October. This is a key macroeconomic indicator reflecting economic stability.

2. Indicators for SDG 9

   • Foreign Direct Investment (FDI) inflows: The article mentions that “net inflows of foreign direct investment (FDI) in the first three months of the current fiscal year increased.” While not giving a precise number, the trend in FDI inflows is used as an indicator of investment attractiveness, which is linked to the quality of infrastructure (Target 9.1 and 9.a).

3. Indicators for SDG 10

   • Differential inflation rates (rural vs. urban): The article implies this as an indicator by stating “the inflation rate in rural Bangladesh in September 2025 was higher than in urban areas.” This comparison serves as a direct measure of economic inequality between geographic areas (Target 10.2).

4. Indicators for SDG 16

   • Perception of corruption and institutional transparency: The article does not provide a quantitative metric but implies a qualitative indicator. The fact that “corruption” and “non-transparent and uneven application of rules and regulations” are cited by a major chamber of commerce as impediments to investment indicates a high level of perceived corruption and institutional weakness, relevant for Targets 16.5 and 16.6.

4. Table of SDGs, Targets, and Indicators

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