Bangladesh economy records sharp contraction in July

Bangladesh's economic activities suffered sharp contractions in July owing to disruption in production and overall businesses amid violence, internet outage and curfew imposed by the immediate past government to quell protests, according to the latest Purchasing Managers' Index (PMI).

The July reading of the Bangladesh PMI—an index based on data compiled from monthly surveys of over 500 private sector enterprises—dropped a hefty 27 points from the previous month to record a sharp contraction at 36.9 points, much below the mid-point reading of 50 that means 'no change'.

A PMI reading above 50 generally indicates 'expanding' and below that shows a 'contraction', according to the Metropolitan Chamber of Commerce and Industry (MCCI) and Policy Exchange Bangladesh, which developed the PMI.

The latest PMI shows contraction in all key sectors of agriculture, manufacturing, construction; and services, said the MCCI.

"The recent events of widespread unrest that culminated in the eventual resignation of the prime minister and fall of the government, have also had an impact on the economy," the MCCI said in a statement regarding the PMI.

"All key sectors of the economy recorded sharp contractions as the previous regime resorted to extreme measures to regain control. Nonetheless, there appears to be a silver lining as the future business index of all key sectors posted expansion readings."

According to the index developed in 2024, the agriculture sector recorded a sharp contraction after six consecutive months of expansion.

The sector posted a sharp contraction rate for the indexes of new business, business activity, and employment.

However, the input costs index posted a faster expansion, whereas the order backlog index posted a slower expansion rate.

The manufacturing sector also posted a sharp contraction after seven consecutive months of expansion, according to the index.

The sector recorded a sharp contraction rate for the indexes of new orders, new exports, factory output, and supplier deliveries, whereas the employment index recorded a slower expansion.

However, faster expansion rates were recorded for the indexes of input purchases and input prices, and the finished goods index reverted to an expansion.

The imports index reverted to a contraction, and the order backlog index posted a slower expansion rate.

The construction sector reverted to a contraction after seven consecutive months of expansion and recorded a sharp contraction in the indexes of new business, construction activity, and employment.

However, the input costs index posted a slower expansion rate, and the order backlog index reverted to an expansion.

The services sector posted a sharp contraction after seven consecutive months of expansion.

The services sector recorded a sharp contraction in the indexes of new business and business activity, a contraction in the employment index, a slower expansion in input costs index, and a slower contraction in the order backlog index.

In terms of the future business index, slower expansion rates were recorded for the key sectors of agriculture and manufacturing.

However, faster expansion was recorded for the key sectors of construction and services.