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The General Economics Division (GED) has projected a delicate balance between a recovering growth trajectory and persistent structural hurdles, saying the economy could grow at 5.0 per cent in the current calendar year.
According to the January 2026 Economic Update and Outlook released on Sunday by the GED under the Planning Commission, the economy will expand by 5.0 per cent in 2026.
The report highlights a "fragile but resilient" recovery as the country navigates a complex democratic transition and prepares for its graduation from the Least Developed Country (LDC) category.
It notes a significant rebound in economic activities compared to the previous fiscal year.
Provisional data for the first quarter of FY26 shows real Gross Domestic Product (GDP) growth rising to 4.50 per cent, a sharp increase from the 2.58 per cent recorded in the same period last year.
The GED said the most pressing concern remained the stubbornly high inflation, which was currently outpacing wage growth and squeezing household purchasing power.
While price inflation increased by 0.20 percentage points last month, wage inflation only grew by 0.03 percentage points to 8.07 per cent, indicating that real income was falling behind.
On a positive note, the external sector showed signs of stabilisation.
Gross foreign exchange reserves strengthened to $33.19 billion in December 2025.
Remittance inflows hit a robust $3.22 billion that month, aided by a more favourable exchange rate and regulatory incentives.
Earnings stabilised at roughly $4.0 billion per month, with the readymade garment (RMG) sector continuing to provide the bulk share of foreign currency.
The GED cautioned that despite the 5.0 per cent growth outlook, several risks could derail the recovery.
"The economy will require strong governance, policy consistency, and sustained investment in skills to diversify beyond the garment sector. Uncertainty among economic elites and institutional weaknesses remains a significant risk during this transition," the report said.