When US President Donald Trump unleashed his " Liberation Day" tariffs on the rest of the world back in April, many experts predicted doom and gloom for global trade.

But here comes a surprise: 2025 will mark the first time that global trade flows surpass US$35 trillion (S$44.9 trillion) on the back of 7 percent growth – double the pace in 2024 – based on data from the UN Trade and Development (UNCTAD), the United Nations arm that promotes trade in developing markets.

As for goods, which the Trump government has targeted instead of services – where the US runs a healthy surplus with most trading partners – growth is projected at 6 percent, triple that of 2024.

Despite its trade war with the US, China reported a trade surplus of US$1 trillion in the first 11 months of 2025 – the first time any nation has reached that figure in a year. Meanwhile, Taiwan, South Korea and Malaysia have been big winners from a surge in demand for semiconductors driven by the artificial intelligence (AI) boom.

In China's case, its shipments to the US between January and November dived by 18.9 percent compared with in 2024 due to escalating trade tensions between the two superpowers. But its exports to other markets more than made up the difference, with the EU buying 8.2 percent more goods from China, while sales to Asean and Africa rose by 13.7 percent and 26.3 percent, respectively.

Taiwan's record export growth, in particular, has led the island to revise its economic growth forecast for 2025 sharply upwards to 7.37 percent – a 15-year high – on the back of roaring AI demand.

In October, outbound shipments surged at the quickest pace in nearly 16 years, jumping 49.7 percent year on year to a record US$61.8 billion. This came on the back of persistent demand for electronic parts and information and communication technology products, which together helped exports grow 48.4 percent year on year in the first 10 months of 2025.

"We think that the export boom has further to run… all the signs point to demand for AI-related goods remaining strong over the next year or so," said deputy chief emerging markets economist Jason Tuvey from London-headquartered Capital Economics.

South Korea is also expected to exceed US$700 billion in annual exports for the first time, in large part due to the strength of the semiconductor sector.

Dark clouds ahead?

Still, doubts remain over whether demand outside of tech will hold up for 2026, given expectations of slowing global economic growth from the likes of the International Monetary Fund and the Organisation for Economic Cooperation and Development.

UNCTAD data shows slowing momentum in the fourth quarter – less than half the pace of the third quarter's 2.5 percent quarter-on-quarter growth.

The agency suggests that front-loading, especially on tech-related products – due to uncertainty over American trade policy – spurred much of the surge earlier in 2025.

"In 2026, global trade growth is expected to be more muted as slowing global economic growth, geopolitical fragmentation, continued policy uncertainty and heightened vulnerability weigh on trade activity. In addition, rising trade costs contribute to an outlook marked by caution," UNCTAD said in its December update.

Even those bullish about AI and tech acknowledge heightened uncertainty over what Washington might have in store for semiconductors, which, along with pharmaceuticals and critical minerals, are currently the subject of an ongoing national security investigation under the Trade Expansion Act.

Mr Tuvey noted that a key risk is the US slapping punitive tariffs on semiconductors, which are currently exempt from the country-based levies imposed on other imports.

Malaysia Semiconductor Industry Association president Wong Siew Hai believes that much rests on the Trade Expansion Act probe, which also covers manufacturing equipment and derivate products. However, he is hopeful that clear strategic interests will prevail.

"This (US-Malaysia) model of business, with the high-end fabrication in the US and assembly and testing in Malaysia, is a win-win for both sides. Since the reciprocal trade agreement was signed, we do not expect any changes going into 2026," he said. The trade deal locks in a 19 percent tariff for Malaysian goods, aside from exempted items imported into the US.

According to the World Semiconductor Trade Statistics organisation, 2026 is expected to see global sales reach close to US$1 trillion, up by over 26 percent from 2025's estimated tally.

Malaysia, where total trade is on track to hit RM3 trillion (S$951 billion) for the first time, has seen its trade surplus for January-November 2025 rising by 10.7 percent to RM132.56 billion.

Datuk Seri Tengku Zafrul Aziz, who was trade minister until Dec 2, told The Straits Times that while November saw a 15.8 percent surge in imports, it was largely in capital and intermediate goods, signalling "ongoing industrial investment and supply-chain deepening, a positive sign for future productivity and export capacity".

"To sustain this momentum, Malaysia should continue diversifying its export markets beyond traditional partners, deepen regional economic integration via ASEAN and new FTAs (free trade agreements), and strengthen supply-chain flexibility to mitigate tariff risk," added Mr Zafrul, who now chairs the Malaysian Investment Development Authority.

One such effort was Malaysia inking a memorandum of understanding with five other ASEAN peers in July to "treat each other as partners to collaborate and integrate our supply chains", said Datuk Seri Wong.

Singapore has also ridden the tech wave, with non-oil domestic exports rising by 11.6 percent year on year in November – marking the second consecutive month of double-digit growth.

Mr Chua Hak Bin, regional co-head of macro research at Maybank, said Singapore's role in the AI supply chain will continue to deepen in 2026 with the opening of Micron's new $8.9 billion advanced packaging facility and UMC's $6.5 billion wafer plant.

"Singapore is also attracting investments in AI research and development facilities and as a global test bed for new technologies," he said.

But diversification has also been part of the storyline, according to HSBC's ASEAN economist Yun Liu, with transport engineering, for example, continuing to grow its exports at a double-digit pace.

"This does not only contribute to the manufacturing sector, but has also boosted related services sectors such as wholesale," she said.

Singapore's low 10 percent baseline tariff gives it a competitive advantage against other US trading partners and will likely mean that investments will be diverted to the Republic.

Supply chain resilience

These developments to build resilient supply chains come as trade becomes an increasingly key plank of geopolitical strategy.

OCBC Bank's head of Asia macro research Tommy Xie believes China's unprecedented trillion-dollar annual trade surplus will be difficult to sustain, and the export pressure exerted by Beijing will likely cause more trade frictions with countries beyond the US.

Already, Mexico has slapped tariffs of up to 50 percent on more than 1,400 products from Asian countries, a move widely believed to be aimed at curbing Chinese imports.

China and Europe have also been trading anti-dumping duties on various goods since last summer, such as electric vehicles and pork. French President Emmanuel Macron has threatened further measures should Beijing fail to reduce its trade surplus with the EU, which exceeded US$350 billion in 2024.

The broad sentiment among observers is also that China cannot continue to rely on exports for future growth.

"The economic support from external demand will decline. It can't be as high as it was this year or last year. This is why domestic demand has become so important. But whether the latter can be held up is uncertain," said Mr Xie.

There is also lingering concern about overconcentration risk on tech.

Ms Chen Mei-chu, head of Taiwan's National Development Council's Department of Economic Development, said the island's economy is uneven, with the tech industry serving as the backbone while non-tech, "old economy" industries underperform.

For instance, the value of Taiwan's machinery exports, which face stiff competition from manufacturing powerhouses such as China where costs are lower, dropped to US$24.1 billion in 2024 – the lowest in four years.

In his national day address in October, Taiwanese President Lai Ching-te said the government will be investing tens of billions of dollars more each year to help small and medium enterprises move towards digital transformation and net-zero emissions.

In November, Mr Thomas Wu, chairman of the Taipei-based Chinese National Association of Industry and Commerce, called on the government to do more to address the imbalance between the high-tech and traditional sectors.

"Taiwan's AI hardware suppliers have delivered strong earnings results and underpinned robust exports, but the nation cannot lean on the AI boom indefinitely," he said.

The United States said it had struck Venezuela and captured its long-serving President Nicolas Maduro on Saturday, after months of accusing him of drug-running and illegitimacy in power, marking a dramatic escalation in geopolitical tensions.

"The United States of America has successfully carried out a large-scale strike against Venezuela and its leader, President Nicolas Maduro, who has been, along with his wife, captured and flown out of the country," President Donald Trump said in a Truth Social post.

Washington has not made such a direct intervention in Latin America since the invasion of Panama in 1989 to depose military leader Manuel Noriega, over similar allegations.

Trump later said at a press conference at his Mar-a-Lago club in Florida that the United States will run Venezuela with a group and Secretary of State Marco Rubio would be working on the details.

The U.S. president has also threatened to come to the aid of protesters in Iran if security forces fired on them, days into unrest that has left several dead and posed the biggest internal threat to Iranian authorities in years.

Meanwhile, the OPEC+ group of crude oil exporters, which includes Venezuela and Russia, meets on Sunday to discuss output.

Below are comments from economists and investors:

JAMIE COX MANAGING PARTNER, HARRIS FINANCIAL GROUP, RICHMOND, VIRGINIA:

"The overall market reaction will be muted—we might get some market moving news tomorrow during the OPEC meeting. (Shares in) Big Oil and the drillers are likely to get a bid, as speculation could build about the potential benefits of rebuilding the oil industry in Venezuela."

HELIMA CROFT, HEAD OF GLOBAL COMMODITY STRATEGY AND MENA RESEARCH, RBC CAPITAL MARKETS, NEW YORK:

"This an enormous undertaking, given the decades-long decline of the oil sector, also the U.S. regime change and nation-building track record is not one of unambiguous success."

BRIAN JACOBSEN, CHIEF ECONOMIC STRATEGIST, ANNEX WEALTH MANAGEMENT, BROOKFIELD, WISCONSIN:

"This was a matter of when, not if. I'm sure people will debate the political and legal angles, but from an investing perspective, this could unlock massive quantities of oil reserves over time. This could also serve as a warning to the leadership in Iran, and perhaps even in Russia, about the president's willingness and ability (to) effect change.

"Markets sometimes swing into risk-off mode on expectations of conflict, but once the conflict starts, they rotate quickly to risk-on. Given how quickly this unfolded, the oil markets might be the only markets to respond. There have been plenty of forecasts of a supply glut in the oil market, and this will just add to that."

MARCHEL ALEXANDROVICH, ECONOMIST, SALTMARSH ECONOMICS, LONDON: "The events are a reminder that geopolitical tensions continue to dominate the headlines and drive the markets. From the unresolved trade tensions around U.S. tariffs, to Ukraine, Iran, Taiwan and, now, Venezuela, it is clear that the markets are having to cope with significantly more headline risk than they are accustomed to under the previous U.S. administrations."

TINA FORDHAM, FOUNDER AND GEOPOLITICAL STRATEGIST AT FORDHAM GLOBAL FORESIGHT, LONDON:

"The sense of almost a bonanza, to me, is likely to follow, even though the history of post-authoritarian transitions is very bumpy and nonlinear. America's track record in the Southern Hemisphere is also fairly patchy. I feel that there's a lot of optimism about a post-Maduro, post-Chavez Venezuela. I think reality is likely to be messier. (For) the Monday open, I think, this is going fuel animal spirits as well as the possibility (of change) in Iran."

"We've periodically seen these protests (in Iran), the regime has been unpopular for a very long time. This time, it's gaining momentum. These would be two markets, energy-producing, consumer markets, that have been off limits to international investors, potentially opening up."

The small and medium enterprise (SME) board of the Dhaka Stock Exchange (DSE) surged sharply today (4 January), with the SME index jumping more than 5% following a regulatory move aimed at widening investor access to the platform.

Brokers said the rally was largely sentiment-driven, as investors welcomed the Bangladesh Securities and Exchange Commission's (BSEC) decision to reduce the minimum investment requirement for trading on the SME board. Under the revised rule, investors with at least Tk10 lakh in the secondary market are now eligible to buy and sell SME shares, down from the previous Tk30 lakh threshold, which had long been criticised for restricting participation and limiting trading activity.

The DSE SME index (DSMEX) jumped 47 points, or 5.43%, to close at 924, marking one of its strongest single-day gains in recent months. Turnover also climbed sharply, rising 80% to Tk5.84 crore from the previous session. Of the 20 SME-listed companies traded, 18 advanced while only one declined, signalling broad-based buying interest. Several stocks hit their upper circuit limits, including Wonderland Toys, Al-Madina Pharmaceuticals, Krishibid Seed and Mostafa Metal, each gaining 10%, while Bengal Biscuits rose nearly 10%.

Market participants said the regulatory change could boost liquidity and investor engagement in a segment that has remained subdued since its launch.

The decision to reduce the threshold amount was taken at the commission's 990th meeting on 30 December 2025, and will be implemented through an amendment to a directive issued on 21 September 2022.

Shares of nine listed companies suffered sharp price corrections today (4 January) after the Dhaka Stock Exchange (DSE) downgraded them to the Z category, reflecting renewed investor concern over corporate governance and compliance failures.

The downgrade was primarily triggered by the companies' failure to hold annual general meetings within the stipulated timeframe, as required under the listing regulations, according to the disclosures filed today at the DSE.

Among the affected companies, Best Holding, Gemini Sea Food, Alif Industries and Beach Hatchery each saw their share prices tumble by around 10% following the downgrade.

Fu Wang Food and Oimex Electrode also faced steep loss, while S Alam Cold Rolled Steels and Kattali Textile posted notable declines after being moved down from the B category.

Gemini Sea Food recorded one of the steepest falls, losing nearly 10% of its value in a single session.

First Security Islami Bank was also placed in the Z category; however, its shares are no longer traded as the bank has already been merged into a newly formed entity, Sammilito Islami Bank. So, there was no immediate market reaction to the classification.

Z-category stocks, commonly referred to as junk stocks, are considered fundamentally weak by investors due to persistent compliance issues and poor financial health.

Companies are placed in this category if they fail to declare dividends based on annual performance, do not hold annual general meetings on time, remain inactive for more than six months, or accumulate losses that exceed their paid-up capital after adjusting revenue reserves.

The downgrade often signals heightened risk and reduced investor confidence, which typically results in sell-offs.

Trading conditions also become more restrictive once a company is downgraded to the Z category. Unlike A and B category stocks, which follow a T+2 settlement cycle, Z-category stocks are settled on a T+3 basis.

In addition, transactions in these shares are limited to cash settlement only, further reducing liquidity and making them less attractive to investors.

Market participants said the sharp price declines following the downgrade were expected, as many institutional and retail investors tend to avoid Z-category stocks due to their higher risk profile and settlement constraints.

The downgrade also serves as a warning signal to shareholders about the governance and operational challenges facing these companies.

Regulatory oversight of Z-category firms has increased in recent years. In May 2024, the Bangladesh Securities and Exchange Commission issued a directive—effective from July—that bars sponsor-directors of Z-category companies from selling their shares without prior approval.

The measure aims to protect general investors from sudden insider exits and to push sponsor-directors to address compliance and governance problems.

Precious metals began the first trading session of the New Year by building on the major gains of 2025 as geopolitical tension and expectations of US rate cuts keep demand for gold high.

Spot gold was steady at $4,313.29 per ounce, as of 01:46 p.m. ET, (1846 GMT), after rising as high as $4,402.06 earlier in the session. Bullion hit a record high of $4,549.71/oz on December 26, and logged a 64 percent rise in 2025.

US gold futures for February delivery settled 0.3 percent lower at $4,329.6/oz.

"We are continuing to see the market talk about cuts in March and maybe another cut later this year... that combination with significant talk about markets potentially being at risk with tariffs and continued US debt are all kind of moving gold, silver, platinum, and palladium higher," said Bart Melek, global head of commodity strategy at TD Securities.

GOLD HAS GREATER INVESTMENT APPEAL WHEN RATES FALL

Markets anticipate at least two quarter-point Fed rate cuts, making non-yielding gold more attractive to investors.

Gold, a traditional safe-haven asset, was also supported by news of unrest in Iran and the absence so far of a Russia-Ukraine peace deal, as well as issues surrounding Gaza.

"Technically, February gold futures bulls' next upside price objective is to produce a close above solid resistance at the contract/record high of $4,584," Jim Wyckoff, senior analyst at Kitco Metals said in a note.

Elsewhere, physical gold traded at a premium in India and China for the first time in about two months.

Spot silver advanced 0.7 percent to $71.77/oz, after hitting an all-time high of $83.62 on Monday. Platinum jumped 3.5 percent to $2,125.80/oz, after rising to an all-time high of $2,478.50, also on Monday.

Both metals outperformed gold in 2025, with silver rising over 147 percent, driven by its designation as a critical US mineral, supply shortages, and low inventories when industrial and investment demand was strong. Platinum rose 127 percent last year.

Palladium gained nearly 2 percent to $1,636.43 per ounce, after closing the previous year up 76 percent, its biggest gain in 15 years.

Sri Lanka's inflation rose 2.1 percent last year, well below its target of five percent, the central bank said Thursday, but projected a "gradual acceleration" in 2026.

While low inflation may appear positive for consumers, a rate below the central bank's target signals underlying economic issues including weak consumer demand.

Sri Lanka has been slowly emerging from its worst economic meltdown in 2022, when it ran out of foreign exchange reserves to pay for essential imports such as food, fuel and medicines.

But it was hit hard in November by a cyclone that killed at least 643 people -- with another 183 listed as missing -- and affected more than 10 percent of the island's population.

The storm caused an estimated $4.1 billion in direct physical damage to buildings and agriculture, according to the World Bank.

The Colombo Consumer Price Index (CCPI), the official measure of inflation, rose to 195.8 in December from 191.7 a year earlier, marking a 2.1 percent increase.

"Inflation projections... (since) November 2025 indicate a gradual acceleration of inflation towards the target of five percent in the period ahead," the central bank said.

Sri Lanka has secured a $206 million emergency loan from the International Monetary Fund (IMF) to meet part of the relief costs.

The country has been stabilising its fragile economy with the help of a $2.9 billion IMF bailout agreed in early 2023.

The US dollar made a feeble start to 2026 today (2 January) after struggling against most currencies last year, while the yen steadied near 10-month lows as traders awaited economic data this month to gauge the path of interest rates.

A dwindling interest rate difference between the US and other economies has cast a shadow over the currency market, resulting in most currencies gaining sharply against the dollar in 2025, with the yen an exception.

The euro was steady at $1.1752 in early Asian hours after surging 13.5% last year, while sterling last bought $1.3474 following a 7.7% increase in 2025. Both currencies clocked their steepest annual rises since 2017.

The yen was last at 156.74 per US dollar after rising less than 1% against the greenback in 2025 and hovering close to the 10-month low of 157.90 it touched in November that sparked worries of intervention from Tokyo.

Severe verbal warnings from authorities in Tokyo through December managed to push the yen away from the intervention zone but those fears still linger.

With markets in Japan and China closed, volumes are likely to be thin and moves muted during Asian hours.

Anthony Doyle, chief investment strategist at Pinnacle Investment Management, said the global economy enters 2026 with reasonable momentum, with the probability of recession remaining low.

"Outside of the United States, the central bank rate cut impulse is fading, which is a feature not a bug: fewer rate surprises reduce one-way market moves and raise the importance of selection across regions, factors and asset classes."

The dollar index, which measures the US currency against six other units, was at 98.243 after registering a 9.4% decline in 2025, its biggest drop in eight years as interest rate cuts, erratic trade policies and worries about the Federal Reserve's independence under the Trump administration weighed.

Economic data including the US payrolls report and jobless data are due next week and will provide clues on the health of the labour market and where US rates may end up this year.

Much of the focus in the early part of the year will also be on who US President Donald Trump picks to be the next Fed Chair as current head Jerome Powell's term ends in May.

Investors are bracing for Trump's pick to be more dovish and cut rates after Trump repeatedly criticised the Fed and Powell last year for not cutting rates more swiftly or deeply. Traders are pricing in two rate cuts in the year compared to one predicted by a divided Fed.

"We expect that concerns around central bank independence will extend into 2026, and see the upcoming change in Fed leadership as one of several reasons why risks around our Fed funds rate forecast skew dovish," Goldman strategists said.

The Australian and New Zealand dollars both started the new year on the front foot. The Aussie was 0.1% higher at $0.66805 after a nearly 8% rise in 2025, its strongest yearly performance since 2020.

The kiwi snapped its three-year losing streak with a nearly 3% gain last year. Today, it was little changed at $0.5755.

The five troubled banks under the process of being merged into the country's largest state-run Islamic lender began repaying depositors yesterday, with no visible rush at their branches.

Most branches of the five lenders reported normal banking activity, hinting at growing depositor confidence in the newly formed Sammilito Islami Bank PLC.

The five banks are the Export Import Bank of Bangladesh (EXIM Bank), First Security Islami Bank, Global Islami Bank, Social Islami Bank and Union Bank.

Signboards bearing the name Sammilito Islami Bank have been installed at the branches and head offices of the merging lenders, while their original signboards have also been kept in place.

Under instructions from the Bangladesh Bank (BB), customers are currently allowed to withdraw up to Tk 200,000 from their savings and current accounts.

Visits to several branches in Dhaka's Motijheel area yesterday found no unusual crowds, with customers seen carrying out regular banking transactions.

At the corporate branch of Social Islami Bank in Motijheel, only five to six customers were seen conducting transactions.

Muhammad Asaduzzaman Miah, manager of the branch, told The Daily Star that clients are permitted to withdraw funds as per their demand, but many are choosing not to do so.

"I think customers are trusting the bank, as it is being merged into a state-run institution," he said.

He added that the branch holds deposits of around Tk 300 crore, the majority of which belong to individual customers.

Many depositors visited branches on the day to inquire about the status of their deposits but expressed no intention to withdraw funds, said Muhammad Badiuzzaman Dider, administrator of First Security Islami Bank.

Dider, who is also an executive director of the BB, said some customers have requested withdrawals, but the process may take time due to certain eligibility criteria.

"Normal banking operations have resumed, and there is no pressure from customers," he said.

On December 30, the BB introduced a comprehensive Bank Resolution Scheme, outlining priority access to deposits at the five merging shariah-based banks and the mechanism for refunding remaining funds over time.

Under the scheme, small depositors are given the highest priority. Individuals with deposits of up to Tk 200,000 are fully protected and may withdraw their money at any time.

Special provisions have also been made for vulnerable individuals. Depositors suffering from cancer or requiring kidney dialysis will face no withdrawal restrictions, regardless of the size of their deposits, according to the refund framework.

Last month, the BB granted the final licence to Sammilito Islami Bank.

The US dollar began 2026 stronger on Friday, snapping last year's slump against most currencies as investors look ahead to a critical week of economic data that could steer Federal Reserve policy and global markets.

The rebound follows the sharpest annual decline since 2017 of more than 9 percent, driven by narrowing interest-rate gaps with other economies and persistent worries over US fiscal health, a global trade war and Fed independence — risks that remain in play this year.

Next week's data deluge, capped by next Friday's payrolls report, is expected to offer clues on whether the Fed will cut rates further, with markets already pricing in two reductions versus one projected by a divided central bank.

"It's going to be a time to actually do a lot of assessment, we won't have the Fed meeting until the end of the month, but there's no consensus," said Juan Perez, director of trading at Monex USA in Washington.

"This past US government shutdown was unprecedented and inconceivably long, so it really affected the way that data has been taken, has been interpreted, and has been able to really be gauged or taken as fully accurate."

Markets in Japan and China were closed on Friday, leading to thin trading volume.

The dollar index , which measures the greenback against a basket of currencies, rose 0.24 percent to 98.48, with the euro down 0.25 percent at $1.1716.

Euro zone manufacturing activity fell in December to its weakest in nine months, a survey showed. The currency surged more than 13 percent last year, its biggest annual rise since 2017.

Sterling weakened 0.18 percent to $1.3445 following a 7.7 percent increase in 2025, also its biggest yearly jump since 2017.

Investors will also be eyeing whom US President Donald Trump chooses to be the next Fed chair as the term of current head Jerome Powell ends in May.

Asia's factory powerhouses closed 2025 on a firmer footing, with activity swinging back to growth in several key economies as export orders picked up, helped by new product launches and blistering demand for artificial intelligence.

Purchasing managers' indexes (PMIs) released by S&P Global today (2 January) showed factory activity in the major tech-exporting economies of South Korea and Taiwan snapping months of declines in December, while most Southeast Asian nations maintained brisk growth.

They followed PMIs released for China on 30 December 2025, which also showed an unexpected turnaround in factory activity in the world's second-largest economy, helped by a pre-holiday surge in orders.

While it is too early to say whether Asia's largest exporters are adjusting to US tariffs, a pickup in global demand had given some manufacturers cause for optimism heading into the new year.

"Exports from most countries have surged in recent months, and we think the near-term outlook for Asia's export-oriented manufacturing sectors remains favourable," said Shivaan Tandon, Asia Economist with Capital Economics.

He noted most Asian economies should continue to benefit from a shift in US demand away from China and strong global demand for AI-related hardware.

Taiwan's PMI rose to 50.9 in December from 48.8 in November, breaking above the 50-point mark that separates growth from contraction for the first time in 10 months.

"Taiwan's manufacturing sector ended 2025 on a high, with firms signalling fresh increases in production and overall new business amid reports of firmer demand conditions," said Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence.

"There were signs that companies anticipate the recovery to continue into 2026, with manufacturers building their inventories and expressing stronger optimism around future output."

Similarly, South Korea's PMI rose to 50.1 from 49.4, the first expansionary reading since September.

Both economies are among the world's largest manufacturers of semiconductors, which have benefited enormously from a booming market for artificial intelligence.

South Korea's PMI survey showed the steepest rise in new orders since November 2024.

"According to manufacturers, new product launches and improved external demand drove the improvement in sales, while confidence in the outlook also improved markedly in December to reach its highest level since May 2022," said Usamah Bhatti, economist at S&P Global Market Intelligence. "In turn, firms were encouraged to raise both employment levels and purchasing activity."

Official data released yesterday (1 January) showed exports from South Korea, a bellwether for global trade, beat forecasts in December.

Elsewhere in Asia, factories mostly sustained activity growth, although Indonesia and Vietnam reported slight moderations in expansion.

India's factory sector activity slowed to its weakest growth in two years, although the pace is still among the region's strongest.

Separately, Singapore on Friday reported a pickup in economic growth for 2025 to 4.8% from 4.4% in 2024, while the quarterly growth beat forecasts.

S&P Global will release the Japanese PMI on 5 January.

Bangladeshis abroad sent home a record $32.8 billion in 2025, according to central bank data, as economists say more expatriates are now using formal banking channels, with informal routes siphoning off less since the August political changeover.

The historic-high inflows offered a much-needed tonic to the country's fragile external balance.

The amount is 22 percent higher than the $26.88 billion recorded in the previous year, according to Bangladesh Bank (BB) data released yesterday.

In December alone, remittances reached $3.22 billion, the highest monthly inflow in nine months, up 22 percent from the same month last year.

Foreign currency streaming in helped lift gross reserves to $33.18 billion on December 30, up from $25 billion a year earlier.

"Remittances have been a key driver for the recent increase in reserves, indicating improved performance of the external sector," said Mohammed Nurul Amin, former chairman of the Association of Bankers Bangladesh (ABB).

After the fall of the previous government, remittance inflows started to rise every month. Previously, demand for hundi was growing amid large sums of money reportedly being siphoned abroad

"Forex reserve figures are now closely watched, as a rise strengthens confidence and attracts foreign interest," he said.

He hoped that the trend could ease pressure on the external sector in the months ahead.

During the July-December period last year, expatriates sent home $16.26 billion, an 18.1 percent increase on the same period in 2024, according to the BB data.

Industry insiders said government incentives, banks' efforts to attract foreign funds, and the decline of the hundi system -- an illegal yet popular cross-border transfer mechanism -- helped push inflows higher after the political changeover in August 2024.

After the fall of the previous government, remittance inflows started to rise every month. Previously, demand for hundi was growing amid large sums of money reportedly being siphoned abroad. That stopped under the interim government.

Mohammed Nurul Amin, former independent director and chairman of Global Islami Bank, said incentives have played a major role in boosting the inflow. "As a result, people are sending more money through formal channels," he added.

Remittance senders currently get a 2.5 percent government incentive.

He also pointed to a psychological change after the fall of the previous government. "People believe that corruption is no longer as prevalent as before," he said, adding that overseas employment has risen, with more skilled workers leaving home for jobs abroad.

Between January and December 28 last year, as many as 1,116,725 men and women went overseas. In 2023, 1,303,453 workers went abroad, while 1,011,969 left the country for overseas jobs in 2024, according to official data.

According to the Bureau of Manpower, Employment and Training, Saudi Arabia welcomed 744,619 Bangladeshi workers, Qatar 106,805, and Singapore 69,491 during the first 11 months and 28 days of the year.

Zahid Hussain, former lead economist at the World Bank's Dhaka office, said more expatriates are using official channels because less money is now being siphoned abroad, reducing demand for hundi transfers.

"Higher reserves boost confidence in the exchange rate, thereby limiting depreciation," said the economist. "Although investment may rise after the election, the strong reserve position should prevent pressure on the exchange rate."

In December, Islami Bank Bangladesh received the highest inflow at $671 million, followed by Bangladesh Krishi Bank with $353 million, Janata Bank $281 million, and BRAC Bank $261 million, showed BB data.

With rising remittances easing demand for US dollars, the central bank purchased over $3 billion in the current fiscal year, a reflection of ongoing efforts to shore up foreign exchange reserves.

After a challenging year, the stock market entered the New Year on high hopes, as bargain hunters placed fresh bets on lucrative stocks on Thursday amid renewed optimism.

Market analysts said investors' optimism over evolving political developments offered some relief to the broadly subdued market sentiment, with hopes for political stability and macroeconomic recovery after the parliamentary election.

Many investors left the market last year, frustrated by political uncertainty, while institutional investors were mostly inactive, leading to price erosion in many well-performing stocks.

Due to massive price erosion, most blue-chip stocks, including much-preferred multinationals, fell to their historical lows, which inspired investors to deploy fresh funds.

In a major development, Acting BNP Chairman Tarique Rahman returned home from London last week after 17 years in exile. As the leader of the largest political party, his return has had a very positive impact on the country's political landscape, analysts say.

Minhaz Mannan Emon, a director of the Dhaka Stock Exchange, said the return of Tarique Rahman has already reduced political tension and improved public confidence in businesses as well as financial markets.

"As the uncertainties surrounding the elections have been cleared, along with policy certainty on the regulatory front, the market is expected to attract fresh investment," said Mr Islam.

The market opened on a positive note and maintained an upbeat trajectory throughout the session, owing to a dominant buying trend, as market participants expected prevailing market uncertainties to have somewhat eased.

"The broad-based price appreciation emerged across most listed securities, with opportunistic investors repositioning into fundamentally strong stocks perceived to be undervalued amid anticipation of improved clarity on the political front," said EBL Securities.

The stockbroker also predicted that liquidity conditions would improve, as the central bank is likely to aim at easing monetary policy by reducing interest rates.

"That should accelerate private-sector credit growth, reinvigorate subdued capital investment, improve company profitability, and restore overall business confidence," said EBL Securities.

The economy already showed signs of recovery as gross foreign exchange reserves crossed $33 billion for the first time in three years on Thursday. Remittances remained buoyant, while exports slowed and imports rose slightly.

Subsequently, the benchmark index of the Dhaka Stock Exchange (DSE) went up more than 45 points, or 0.93 per cent, to 4,910, after losing 6.7 per cent last year.

The DS30 index, a group of 30 prominent companies, gained 16 points to 1,869, while the DSES index, which represents Shariah-based companies, rose five points to 1,006.

The price surge in heavyweight banking stocks such as BRAC Bank, Pubali Bank, Eastern Bank, Islami Bank, and Uttara Bank largely contributed to the market index rise. These five stocks accounted for one-third of the gain in the DSEX.

However, investor participation has yet to rebound, as most investors remain watchful of the market's momentum, although turnover increased slightly by 4 per cent to Tk 3.68 billion compared to the previous session.

Investors were mostly active in the textile sector, which accounted for 18 per cent of the day's total turnover, followed by the banking and pharmaceutical sectors.

Gainers outnumbered losers, as out of 391 issues traded, 263 saw price jumps, while 66 declined and 62 remained unchanged on the DSE floor.

Most large-cap sectors posted positive performance. Non-bank financial institutions booked the highest gain of 2.07 per cent, followed by banking, power, pharmaceuticals, food, engineering, and telecommunications.

Orion Infusion became the most-traded stock, with shares worth Tk 160 million changing hands, closely followed by Uttara Bank, Simtex Industries, Sonali Paper, and City Bank.

The Chittagong Stock Exchange also closed higher, with its All Shares Price Index (CASPI) gaining 81 points to 13,692, while the Selective Categories Index (CSCX) rose 47 points to 8,440.

The government has reduced interest rates on all major national savings certificates (NSCs) for the next six months, aligning them with prevailing market interest rates.

Under the revised structure, the highest return on savings instruments will now be 10.59 percent, while the lowest will be 8.74 percent, according to an announcement by the Internal Resources Division on December 30.

The new rates came into effect yesterday. However, the revised rates will apply only to new investments made after January 1, 2026. Investors who purchased savings certificates earlier will continue to receive returns at the rates applicable at the time of issuance.

This is the second reduction in interest rates within six months. Under the current policy, NSC interest rates are reviewed every six months.

Under the new structure, investors with smaller investments – up to Tk 7.5 lakh – will receive comparatively higher returns than those investing above that threshold.

Previously, the most popular instrument, the Family Savings Certificate, offered investors a return of 11.93 percent on investments of up to Tk 7.5 lakh upon maturity after five years. This rate has now been reduced to 10.54 percent.

For the same amount of investment, the Pensioner Savings Certificate offers an interest rate of 10.59 percent, down from 11.98 percent. Five-year Bangladesh Savings Certificate offers 10.44 percent, down from 11.83 percent.

The five-year Bangladesh Savings Certificate now offers 10.44 percent, down from 11.83 percent for up to Tk 7.50 lakh.

For all three above-mentioned savings instruments, investments exceeding Tk 7.5 lakh will provide a return of 10.41 percent, down from 11.80 percent.

Returns on the quarterly interest-based savings certificates have also been cut. Investors with up to Tk 7.5 lakh will now receive 10.48 percent, while those above the limit will earn 10.43 percent.

Interest rates on Wage Earner Development Bonds have also been reduced across all investment slabs, with returns now ranging from 11.20 percent for lower tiers to 8.40 percent for the highest investment bracket.

Bangladesh's gross foreign exchange reserves crossed $33 billion for the first time in three years since fiscal year 2021-22, a sign of the country's increasing capacity to cover import bills for a longer period.

Readily usable reserves, as per the calculation method of the International Monetary Fund (IMF), stood at $28.51 billion on December 30, 2025, up from a week earlier, Bangladesh Bank (BB) said yesterday.

It means that Bangladesh can cover import payments for more than five months. The country's monthly import bill is more than $5.50 billion, according to BB data.

Forex reserves, which had crossed $48 billion in August 2021, began to fall amid pent-up demand for imports following the removal of Covid restrictions and rising commodity prices in the global market after Russia's invasion of Ukraine.

In May 2024, overall dollar stock holdings stood at $24 billion, raising concerns about the country's capacity to clear international payment obligations.

The turnaround in forex reserves began after the fall of the Awami League government in August last year, as remittance inflow increased.

The BB, which had earlier sold the greenback to support the value of the taka, began purchasing US dollars from banks at the start of the current fiscal year 2025-26 to curb the depreciation of the greenback.

The BB has bought $3 billion so far this fiscal year.

During the July-November period, remittance inflow grew 17 percent year-on-year to $13 billion. Export growth was slightly higher, while imports also gained momentum, according to official data.

Zahid Hussain, former lead economist at the World Bank's Dhaka office, said the foreign exchange reserves are increasing mainly due to higher remittance inflows and subdued imports. As a result, the demand for foreign currency has remained low while supply is relatively high.

Higher reserves strengthened confidence in the exchange rate, helping limit depreciation, Hussain added.

He said demand for private investment may increase after the general election scheduled for next month, but the high level of reserves will likely prevent significant pressure on the exchange rate.

Under the new Public Issue rules, general investors will no longer receive any discount when purchasing IPO shares through the book-building method. Now, general investors must buy shares at the cut-off price, which is determined based on the demand of eligible investors.

The new rules regarding public issues have already been published in the Gazette. Previously, the BSEC had released the draft rules on its website to gather public opinion.

According to the new regulations, the Issue Manager, in consultation with the issuer, will determine the Indicative Price. This price will be based on valuations provided by investment bankers or investors (EIs) during the roadshow, reflecting their demand.

The determined Indicative Price must be disclosed in the red-herring prospectus and must be supported or justified using at least four valuation methods—two from absolute valuation and two from relative valuation.

Furthermore, the Indicative Price must be supported by valuations from at least 40 investors (EIs). These 40 investors should come from different categories, with at least 10 from each of the following three categories: Portfolio Manager, Stock Dealer, and Asset Manager.

The cut-off price will be determined if the Indicative Price varies by more or less than 25%. This cut-off price will serve as the uniform price, which all investors must use when purchasing IPO shares through the book-building method.

The new rules also allow companies to repay up to 30% of fresh loans, subject to conditions. Companies must submit proper reports for such loans, and repayment of non-performing loans is not allowed.

Additionally, instead of the previous 90-day timeline, companies are now allowed 120 days to submit their financial statements.

The BSEC will conduct IPO proceedings based on recommendations from the stock exchanges. Issuer companies are allowed to appeal to the BSEC if necessary. The stock exchanges will also conduct on-site visits for manufacturing companies and, if required, prepare recommendations through expert teams.

The new rules further state that a company is eligible for a public issue if it has not increased its paid-up capital in cash or other consideration (except bonus shares) within the two years preceding the application.

However, if shares are issued in exchange for valid consideration, and not for intangible assets or intellectual property, as part of any collaborative investment, prior approval from the Commission is required.

Right shares may be issued only to existing shareholders or strategic investors through cash via banking channels, and only up to one year before the application date.

This provision does not apply to companies operating under a Public-Private Partnership (PPP) recognized by the PPP Authority, or to companies where the majority shareholding belongs to the state or foreign investors.

Collaborative Investment refers to any equity investment made in a company registered in Bangladesh through joint ventures, alternative investment funds, or foreign strategic investors.

Dhaka Chamber of Commerce & Industry (DCCI) has warned that political uncertainty ahead of Bangladesh's national election could threaten economic recovery, urging timely and effective policy measures to sustain growth and bolster investor confidence in 2026.

In a media release today (3 January), the apex trade body called on the interim government, political parties and all stakeholders to ensure a peaceful, inclusive and credible election scheduled for February 12, 2026, stressing that political stability remains crucial for sustainable economic recovery and investment growth.

DCCI said a stable political environment during and after the election would help restore confidence among local entrepreneurs and foreign investors, which is vital for reviving growth amid ongoing macroeconomic challenges.

To accelerate economic recovery in 2026, the Chamber urged the government to prioritise improvement in the law and order situation, ensure uninterrupted and affordable energy supply to industries, enhance ease of doing business and reduce the overall cost of business.

The Chamber also emphasised strengthening infrastructure and policy frameworks to attract both domestic and foreign investment.

It further highlighted the need for export diversification, targeted support for potential export sectors, easier access to finance for cottage, micro, small and medium enterprises (CMSMEs), and development of a skilled workforce to support long-term growth.

DCCI expressed concern over the ongoing energy crunch and high energy prices, saying these continue to disrupt manufacturing and industrial production, eroding Bangladesh's competitiveness in global markets.

It reiterated the need for a long-term and predictable energy pricing policy, accelerated gas exploration, diversification of energy import sources and expansion of long-term energy supply agreements.

The chamber also noted that persistent foreign exchange pressure and currency depreciation have adversely affected the financial sector, particularly imports of fuel, raw materials and intermediate goods for export-oriented industries. It suggested prioritising currency swap arrangements for essential import payments and enhancing incentives for remittance inflows to stabilise foreign exchange reserves.

At the same time, DCCI underscored the importance of fiscal discipline, improved project implementation efficiency, reduced reliance on bank borrowing and stronger governance to ease liquidity pressure in the financial sector.

The chamber warned that excessive government borrowing from the banking system could crowd out private-sector credit, constraining investment and employment growth, especially in local manufacturing and CMSMEs.

It stressed the need for full automation of revenue management, modernisation of tax laws, expansion of the tax base and strict measures to prevent harassment of compliant taxpayers.

As Bangladesh advances in its transition from least developed country (LDC) status, DCCI emphasised comprehensive economic preparedness.

To sustain export growth in the post-LDC era, the Chamber urged faster efforts to sign free trade agreements (FTAs) with key trading partners and regional economic blocs to expand market access and reduce tariff-related vulnerabilities.

DCCI said export diversification, uninterrupted industrial production, stronger local industries, modern infrastructure, skilled human resources, technological upgradation, expansion of backward linkage industries and rational tax and tariff reforms will be key determinants for maintaining economic growth in 2026.

Private sector bank credit growth has remained stuck below 7% for six consecutive months. As of the end of November 2025, growth fell to 6.58% – below the target set by Bangladesh Bank – raising renewed concerns about the country's investment climate.

Economists and bankers say this slowdown in private sector credit growth mainly reflects a decline in new investment in the country. They note that weakening credit growth signals subdued investment demand, reduces capital formation, and can slow economic growth, employment creation and export competitiveness.

Distinguished Fellow of the Centre for Policy Dialogue (CPD) Professor Mustafizur Rahman said that without new investment, demand for bank credit in the private sector does not increase. "The current credit growth indicates that new industrial and expansionary investments in the country are very limited," he said.

Bankers echo this view, saying entrepreneurs are reluctant to take new loans due to high interest rates, policy uncertainty and weak demand.

Mohammad Ali, managing director of Pubali Bank Limited, said, "Investment will increase once a business-friendly environment is created after the election. And as investment rises, borrowing from banks will also increase. That will lead to higher private sector credit growth."

He added, "Low business activity in the private sector indicates that imports of capital machinery have declined."

Mustafizur Rahman believes that lower investment will worsen unemployment, which in turn will reduce GDP growth.

According to Bangladesh Bank data, settlement of capital machinery imports fell by more than 16% during the July-November period.

As of the end of November 2025, private sector credit growth has remained below 7% for six straight months.

In November 2024, private sector credit growth stood at 7.66%. Bangladesh Bank data show that growth has remained in single digits for 16 consecutive months.

The last time it reached double digits was in July 2024, at 10.13%. From August that year onward, private sector credit growth continued to decline, reaching 6.23% in October 2025—the lowest level on record, according to experts.

Bangladesh Bank's projection for December 2025 is 7.2%. This means the November credit growth figure was even lower than the central bank's target, indicating that businesses are borrowing significantly less than what Bangladesh Bank had anticipated for the private sector.

Economists and bankers point to several reasons behind the decline in private sector credit and warn that it has multiple repercussions for the economy.

Professor Mustafizur Rahman said the primary reason for the fall in demand for private sector bank credit is the sharp decline in new investment. "The more new investment takes place, the more private sector credit grows. The current situation clearly shows that new investment is very low, which is why credit growth has fallen significantly," he said.

He added that the lack of new investment has also led to a drop in capital machinery imports.

Many large businesses are operating slowly, and many others have shut down.

Senior bank officials said that following the fall of the Awami League government, many businesses have closed, while those still operating are far from running at full capacity. Several factories belonging to groups such as Nassa, Beximco and Gazi have shut down. As these factories are inactive, they are no longer borrowing from banks. When operational, these factories used to import capital machinery. Even firms that remain open have cut production by 60 to 70% compared to earlier levels.

Mohammad Ali of Pubali Bank said many large businesses shut down after the government's fall, while others are running at a very slow pace. "Top business groups are the largest borrowers from banks because their operations are big and require substantial financing," he said.

Political uncertainty creates unfavourable investment environment

Business owners are reluctant to make new investments due to the prevailing political situation. Various incidents associated with what is being described as a "mob culture" have created an environment that discourages investment. Business leaders say as long as political instability persists, new investment will not come.

Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said, "If the country is stable, businesses will invest. If it is unstable, they will not – it's that simple. No one will invest by taking unnecessary risks. Losses ultimately fall on business owners. Given the current situation, new investment is not possible. Even after the election, it cannot be guaranteed that conditions will normalise. Investment will rise only if a new, business-friendly environment is created after the election."

He added, "The current 'mob culture' is not business-friendly. Unless this culture is eliminated, neither foreign nor local investors will come. Before making any new investment, businesses assess the law and order situation, and everyone can see what the current situation is like."

Mustafizur Rahman said, "Given the present political conditions, it is unrealistic to expect new investment. However, after a credible election, private sector credit growth may begin to recover."

Energy crisis discourages new investment

Businesses are struggling to operate factories properly due to gas shortages, a problem that has intensified over the past several months. As a result, many firms are unable to produce at desired levels and are incurring losses by year-end. Business owners say repeated appeals to the government have failed to resolve the issue, and business expansion has slowed as a consequence.

Mohammad Hatem said, "There is a serious shortage of gas and electricity for new businesses. Before investing, I have to think whether I will even get gas. The government is currently unable to ensure uninterrupted gas and power supply. I could not operate my own factory properly due to these shortages, which increased costs and reduced profits."

He added, "If you import machinery worth Tk50 crore and cannot operate it properly for three years, the extent of the losses is obvious."

A senior private bank official said many businesses are facing difficulties due to gas and power shortages, discouraging them from making new investments. Energy insecurity, he said, has become one of the biggest challenges for businesses.

High interest rates reduce business profitability

Mohammad Hatem said bank lending rates are currently between 15% and 16%, significantly increasing business costs. "Because of high interest rates, businesses are unwilling to expand. Until lending rates come down, new investment is simply not feasible. No business can survive on high-interest loans," he said.

He also criticised tax collection practices, saying the way the NBR collects taxes is unfriendly to business and makes operations increasingly difficult.

Mustafizur Rahman said rising inflation has pushed up costs across all sectors. "Inflation remains high, though Bangladesh Bank says it will be able to bring it down within the next six months. If inflation falls below 7%, the policy rate could be reduced, which would then lower lending rates," he said.

Banks turn to govt securities for income

As private sector lending slows, banks have increased their investment in treasury bills and bonds. A senior private bank official said weak loan demand has pushed banks toward these instruments. Meanwhile, the government has been borrowing heavily from banks through treasury bills and bonds, even taking an additional Tk10,000 crore outside the calendar during the October–December quarter.

With limited scope for private investment, banks are investing in government securities, earning around 11% interest with virtually full security.

A major share of traditional banks' income now comes from such investments.

Although early 2025 raised concerns over rising deposit rates, persistent inflation, weak loan demand, squeezed margins and political uncertainty, the opposite has unfolded.

Private banks – particularly stronger ones – have seen profits grow not through loan expansion but through substantial earnings from government securities, which have become the sector's new lifeline and reshaped bank balance sheets.

Chattogram Port Authority (CPA) closed the 2025 calendar year with its strongest-ever financial and operational performance, reporting record revenue alongside historic highs in container, cargo and vessel handling, despite a year marked by labour disruptions, customs work stoppages and a volatile national situation.

The port earned Tk5,460.18 crore in revenue in 2025, a 7.55% increase over the previous year, while the revenue surplus rose to Tk3,142.68 crore, up 7.51%. Around 85% of the port's income came from vessel-related services and cargo and container handling, reaffirming its role as a core revenue-generating institution for the state, according to a press release from CPA.

Operationally, Chattogram Port hit historic highs in all major indicators in 2025. The port handled 34,09,069 TEUs of containers, 13,81,51,812 tonnes of cargo and 4,273 vessels during the year.

Compared to 2024, container handling increased by 4.07%, cargo handling by 11.43% and vessel handling by 10.50%. In absolute terms, this meant an additional 1,33,442 TEUs, 1.42 crore tonnes of cargo and 406 more vessels year-on-year. Container throughput crossed 34 lakh TEUs for the first time, marking a milestone in the port's history.

Currently, around 92% of Bangladesh's general cargo and nearly 98% of containerised import-export cargo move through Chattogram Port.

Strong momentum at CDDL-operated terminals

Container terminals operated by Chittagong Dry Dock Limited (CDDL) also recorded notable growth. In the first six months of the 2025–26 fiscal year, from July to December, these terminals handled 6,98,668 TEUs, up 10.19% from 6,34,048 TEUs in the same period of the previous fiscal year.

The terminals handled 64,620 additional TEUs during the six-month period, with October alone registering the highest monthly growth at 20.15%. CPA attributed the performance to the addition of modern cargo-handling equipment, yard expansion, wider use of information technology and the sustained efforts of port officials, workers and port users.

Efficiency gains cut lead time and support trade

Despite disruptions from customs pen-down strikes and political uncertainty, operational efficiency improved during the year. Vessel waiting times fell significantly, with ships recording zero waiting days on nine occasions in September, 18 days in October and 26 days each in November and December.

Currently, vessels are receiving berthing on arrival. From January to November 2025, the average vessel turnaround time stood at 2.53 days, while container dwell time averaged 9.44 days.

CPA officials said faster turnaround has reduced port lead time, enabling importers to take quicker delivery of goods and exporters to ship cargo on schedule. This, they said, will help ease pressure on consumer prices, boost export momentum, particularly in the readymade garment sector, and support higher foreign exchange earnings.

Higher contribution to national exchequer

The port's improved financial performance translated into a stronger contribution to the government. In 2025, CPA paid Tk1,804.47 crore to the national exchequer, making it one of the country's largest revenue-contributing state entities.

Over the past five fiscal years, the authority's total direct and indirect contributions, including taxes under the Finance Act, municipal taxes and land development taxes, amounted to Tk12,349.50 crore. Annual contributions rose from Tk1,095.54 crore in the first year to Tk1,829.45 crore in the fifth year, reflecting a 14.77% growth in the latest fiscal year.

The government has once again cut interest rates on all types of national savings certificates, with the revised rates set to remain in force for the next six months.

A notification issued by the Internal Resources Division (IRD) said the new rates took effect on 1 January 2026.

Under the revised structure, the rate on Family Savings Certificates for investments of up to Tk7.5 lakh at the end of the five-year term has been reduced from 11.93% to 10.54%, while returns on investments exceeding Tk7.5 lakh have been lowered from 11.80% to 10.41%.

The profit on Pensioner Savings Certificates at maturity after five years for investments of up to Tk7.5 lakh has been reduced from 11.98% to 10.59%. For investments above Tk7.5 lakh, the return has been lowered from 11.80% to 10.41%.

For the five-year Bangladesh Savings Certificate, the profit rate at maturity has been fixed at 10.44% for investments of up to Tk7.5 lakh, while those investing more than Tk7.5 lakh will now earn 10.41%.

Returns on three-monthly profit-based savings certificates have also been cut. At maturity, investments of up to Tk7.5 lakh will now yield 10.48%, down from 11.82%, while returns on investments exceeding Tk7.5 lakh have been reduced from 11.77% to 10.43%.

However, profit rates on the Wage Earner Development Bond, US Dollar Premium Bond, US Dollar Investment Bond, and the general account of the Post Office Savings Bank remain unchanged.

Family Savings Certificate remains the most popular instrument among the various savings products managed by the National Savings Directorate, as many households rely on returns from these investments to meet regular family expenses.

Bangladesh has been grappling with elevated inflation for the past two to three years. Data from the Bangladesh Bureau of Statistics (BBS) show that point-to-point inflation stood at 8.29% in November 2025, with little change observed in market prices in December. Against this backdrop, the latest cut in savings certificate returns is likely to add further strain on households that depend on interest income to manage daily costs.

Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), told TBS that lowering returns on savings schemes would disproportionately affect fixed-income earners and retirees, particularly at a time of persistently high inflation.

She also noted that while the move aims to reduce the government's interest burden, it would have been more beneficial for the public if the rate cuts had been implemented after inflation eased to a more manageable level.

Pre-July 2025 savings schemes are unaffected

For all National Savings Schemes issued before 1 July 2025, the interest rate fixed at the time of issuance will remain effective until the maturity period. However, in the case of reinvestment, the rate prevailing on the date of reinvestment will apply. The rate will be reviewed and reset again after six months.

To meet budget deficits, the government borrows from domestic sources through savings schemes. In the current fiscal year's FY26 budget, the government has set a target of Tk12,500 crore in net borrowing through National Savings Schemes. In the original budget of the previous fiscal year, the target was Tk15,400 crore, which was later reduced to Tk14,000 crore in the revised budget.

According to Bangladesh Bank sources, during the first four months of the current fiscal year (July-October), the government borrowed a net Tk2,369 crore from various savings schemes.

At the end of the previous fiscal year, net borrowing stood at a negative level of more than Tk6,000 crore. For the past three fiscal years, sales of savings certificates were lower than encashments, resulting in negative net sales. Overall, as of the end of last October, the government's outstanding liabilities from savings certificates stood at Tk3,40,868 crore.

With less than eleven months left before Bangladesh exits the least developed country club, businesses say they are still not adequately prepared to face the harsher realities of a post LDC world.

At the core of their concerns is the absence of trade agreements that would allow exporters to retain preferential market access once the country formally becomes a developing nation.

Business leaders also point to weaknesses at home, from infrastructure and logistics to limited product diversification and high production costs, all of which undermine competitiveness against regional peers.

Manufacturers say if the government presses ahead with graduation without adequate preparation, they may lose at least $8 billion a year in overseas sales currently protected by preferential treatment.

The interim government has repeatedly said it will stick to the November 2026 graduation deadline. But in the face of widespread opposition, it invited a United Nations (UN) body to assess conditions on the ground.

The United Nations Committee for Development Policy (UNCDP) conducted its first assessment in November last year, gathering views from business leaders, policymakers and economists. A second round-up is scheduled for February, the same month the next national election is due.

Now business leaders say they plan to approach the next government to seek a deferment of at least six years.

AT LEAST $8B AT STAKE

Studies suggest Bangladesh could lose around 14 percent of its annual export earnings, equivalent to about $8 billion, once it leaves the LDC group and preferential access begins to fade.

At present, exporters enjoy duty-free or preferential entry to 38 countries and several trade blocs. About 73 percent of national exports benefit from these facilities.

According to trade data, Bangladesh alone accounts for 67 percent of total LDC preference utilisation among the 46 countries in the group.

Economists say these advantages have been central to export growth over the past decades. Since joining the LDC category in 1975, Bangladesh has used preferential access to build a strong export base, especially in garments.

Last year, apparel exports reached $39 billion, making Bangladesh the second-largest garment exporter after China with close to 8 percent of the global market. Meanwhile, the country's economy has grown into a $456 billion market.

The risk, according to economists, is concentration. Unlike many countries that have graduated, Bangladesh is heavily reliant on a single export sector and a limited number of markets, leaving it more exposed to any sudden loss of trade privileges.

FEW TRADE DEALS SO FAR

To manage the graduation shock, the government last year adopted a Smooth Transition Strategy (STS). The strategy envisaged signing trade agreements with major partners to preserve market access after graduation.

But the progress has been slow so far.

Till January this year, Bangladesh has signed just one preferential trade agreement (FTA) with Bhutan, effective since 2022.

Negotiations with Japan on an Economic Partnership Agreement (EPA) were completed in December last year. Commerce Adviser Sk Bashir Uddin said the deal with the island nation is expected to take effect by the end of January.

Talks with other key partners and blocs, including the European Union (EU), South Korea, the United Arab Emirates, Indonesia, RCEP and Asean, continue with no clear timelines.

At home, businesses say conditions have worsened rather than improved. Bureaucratic delays, policy uncertainty and infrastructure bottlenecks continue to push up overhead costs and weaken competitiveness.

Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said the government does not have a clear roadmap for graduation.

"The interim government did not sit with businessmen and did not prepare any concrete plan for the post-LDC period," he said.

HOME FRONT WEAK TOO

Last year, leaders of 16 major trade bodies and chambers wrote to Chief Adviser Professor Muhammad Yunus, urging the interim government to seek a deferment of at least six years.

They cited a long list of pressures, including high interest rates, stress in the financial sector, gas shortages, rising energy prices, limited industrial land and inadequate workforce skills.

Business leaders argue that pressing ahead without proper groundwork would be a costly error.

"The decision on LDC graduation should not be whimsical. It must be based on detailed studies," said Anwar-ul Alam Chowdhury (Parvez), president of the Bangladesh Chamber of Industries (BCI) and a former BGMEA president.

Showkat Aziz Russell, president of the Bangladesh Textile Mills Association (BTMA), said primary textile producers are already struggling under higher production costs. "Gas prices were raised locally although international prices fell, which hit production hard," he said.

He added that recent improvements in foreign exchange reserves and remittance inflows do not yet point to economic stability. "Graduating in such a situation would not reflect wisdom," he said.

Some economists echo these concerns.

Mohammad Abdur Razzaque, chairman of local think tank Research and Policy Integration for Development (RAPID), said the level of overall preparation is inadequate given the limited time left.

"Bangladesh must identify a small number of top priorities that can realistically be addressed within the next six months," said the economist.

Those priorities, according to him, include reducing the cost of doing business, improving law and order, streamlining customs procedures and stepping up engagement with the European Union to secure GSP Plus status after graduation.

Razzaque said that while deferment remains an option, the looming election and political transition make decisions more complex.

Even so, he said graduation could still serve as a policy anchor if used to accelerate long delayed reforms.

Anisuzzaman Chowdhury, special assistant to the chief adviser of the interim government, said progress should be viewed in relative terms, as there is no single benchmark.

He said the government has identified 12 priority export sectors beyond garments and is working to improve compliance and the broader business environment.