ORAWEK Morning Brief — Sunday, 26 July 2026

Sunday, July 26, 2026 opens Bangladesh’s work week with a genuine piece of good news arriving alongside some sobering numbers. In Anwara, Chattogram, construction finally begins today on the Chinese Economic and Industrial Zone (CEIZ) — a project first agreed in 2014 that has taken more than a decade to reach the groundbreaking stage. On the same morning, fresh central bank data confirm that Bangladesh’s banking sector is under real strain, with classified loans more than doubling in a year and the non-performing loan ratio climbing to among the highest in the world.

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Chinese Economic Zone Finally Breaks Ground in Anwara

After more than ten years of delay, the Chinese Economic and Industrial Zone in Chattogram’s Anwara upazila holds its formal groundbreaking ceremony at 10am today. The 800-acre government-to-government project is being developed by China Road and Bridge Corporation (CRBC), and authorities expect it to attract roughly $500 million in foreign direct investment while creating more than 1 lakh direct and indirect jobs. Completion is targeted for December 2031, though Bangladesh Economic Zones Authority officials say 60 percent of industrial plots should be ready for factory construction within the first three years.

The project gathered fresh momentum following Prime Minister Tarique Rahman’s official visit to China in late June, during which Beza signed a developer agreement with CRBC and the two governments finalised financing arrangements. China’s ambassador to Bangladesh, Yao Wen, says more than 30 Chinese companies have already committed close to $500 million toward the zone, which is expected to host advanced textiles, pharmaceuticals, light engineering and IT investment. The Executive Committee of the National Economic Council approved a Tk4,189 crore package of supporting infrastructure — including a jetty link road, a multipurpose jetty, gas transmission facilities and power substations — with China providing Tk2,467 crore of that through concessional financing.

Industry figures have welcomed the news. BGMEA director SM Abu Tayyab said the zone would let Bangladeshi apparel makers source fabric and accessories locally rather than importing from China, cutting both lead times and costs. Chattogram Chamber president Amirul Haque called it a boost to both employment and Bangladesh’s broader trade relationship with China.

Classified Loans Double, NPL Ratio Hits 32.7%

The good news out of Anwara arrives the same week Bangladesh Bank’s “Banking Sector Update” report, published July 23, revealed that the number of accounts carrying classified loans of up to Tk1 crore rose to 45.43 lakh at the end of March 2026 — more than double the 21.63 lakh recorded a year earlier. The central bank described this as a “mass retail-level deterioration,” pointing to rising living costs, household indebtedness, a slowdown in SME activity and weak repayment capacity in agriculture and small trade as underlying drivers.

Overall non-performing loans as a share of total outstanding credit climbed to 32.7 percent in March 2026, up from 24.6 percent a year earlier — a ratio Bangladesh Bank itself calls alarming, and one that puts Bangladesh among the world’s worst performers on this measure. The cottage industry shows the most acute stress, with a classified-loan ratio of 52.8 percent, while combined CMSME and informal-sector loans account for a disproportionate 34.2 percent of classified loans against just 21.4 percent of total lending. Islamic banks and state-owned banks are flagged as particularly vulnerable, in contrast to foreign banks, which maintain much lower default levels.

Bangladesh Bank was careful to note that the crisis remains primarily driven by large corporate “willful defaulters” rather than small individual borrowers — even as the number of small retail accounts falling into default has exploded. BRAC Bank’s deputy managing director Md Mahiul Islam pointed to weak credit-risk appraisal, high inflation and eroded purchasing power as contributing factors on the retail side.

Trade Deficit Widens 24 Percent as Capital-Machinery Imports Slump

Bangladesh’s trade deficit widened by nearly 24 percent to $23.98 billion in the first eleven months of FY26 (July–May), according to Bangladesh Bank and Export Promotion Bureau data, up from $19.38 billion in the same period a year earlier. Total imports reached $64.02 billion against exports of just $40.04 billion. The most concerning detail is a 10.68 percent drop in capital-machinery imports to $1.80 billion — a leading indicator economists say points to weaker future industrial output — alongside a 3.33 percent decline in industrial raw-material imports.

Several major business groups, including Beximco, Nassa Group and Gazi Group, are reportedly running factories at just 30 to 40 percent capacity following recent political and financial disruptions, compounding the investment slowdown. Total merchandise exports for FY26 reached approximately $48 billion, missing the government’s $55 billion target, with the RMG sector — 80 percent of total exports — earning around $38.70 billion, down 1.64 percent year-on-year.

What has kept the external account from severe distress is remittances: Bangladesh received a record $35.5 billion in FY26, up 17.3 percent year-on-year, generating a $4.16 billion financial-account surplus. In response to trade headwinds, the government has begun rolling out its first Free Trade Zone framework, allowing duty-free import, processing and re-export of raw materials without conventional letters of credit.

RMG Exports Face a Longer Road Back

Exporters and international buyers say Bangladesh’s sluggish garment exports are unlikely to rebound quickly. The dragging Iran war has driven up energy costs and fed inflation in the US and European markets that absorb most Bangladeshi apparel, weakening demand even as production costs at home climb. The Trump administration’s 10 percent tariff on Bangladeshi goods held steady on Friday, removing one source of uncertainty, but order flow remains slow, exporters say.

A structural concern looms larger: roughly 78 percent of Bangladesh’s garment exports come from just five basic categories — trousers, T-shirts, formal woven shirts, underwear and sweaters — leaving the country exposed in an oversupplied, price-competitive global market. Buyers interviewed say Bangladesh will struggle to sustain even $50 billion in RMG exports by 2030 without diversifying into higher-value products, particularly as India gains ground with export incentives and a potential EU free trade agreement, and as Bangladesh’s looming graduation from least-developed-country status threatens preferential market access.

Benapole Revenue Target Cut as India-Linked Trade Slows

The National Board of Revenue has set a Tk10,588 crore collection target for Benapole Customs House this fiscal year, six percent lower than before, after imports from India through the country’s largest land port fell six percent year-on-year to 12.05 lakh tonnes. Officials cite Indian trade restrictions, bilateral tensions and a stepped-up crackdown on customs fraud — at least 130 cases detected in six months — as contributing factors.

Economy Watch: Key Indicators

• USD/BDT (interbank): 123.76, high/low 123.80/123.70, spot rate 123.70 (Bangladesh Bank, 23 July reading — last trading day before the weekend)
• Yuan/BDT: 18.25–18.27 bid rates (Bangladesh Bank, 23 July)
• DSEX: 5,804.29, down 66.76 points (-1.137%) at Thursday’s close, the most recent trading session (DSE Official)
• Gold (22K/bhori): Tk220,858 as of 8am today (BAJUS)
• Inflation: 9.16 percent point-to-point in June, down from 9.42 percent in May; food inflation 8.60 percent; no July print yet (BBS)
• Policy rate: Held at 10.0 percent since October 2024; SLF at 11.5 percent; Bangladesh Bank has set a 7.5 percent inflation ceiling and 6.5 percent GDP growth target for FY27
• GDP growth: ADB’s July 2026 Asian Development Outlook puts FY26 actual growth at 3.7 percent — below the BBS provisional estimate of 4.14 percent — with 4.5 percent forecast for FY27; ADB projects inflation at 9.0 percent in 2026 and 8.8 percent in 2027
• Gross forex reserves: $37.58 billion as of June 2026 (BPM6 basis: $32.93 billion), per Bangladesh Bank’s monthly reading

Global Signal: What’s Reaching Dhaka This Morning

The Iran war entered a rare pause on Friday after 13 consecutive nights of US airstrikes, with the New York Times reporting that depleted interceptor stockpiles at CENTCOM were central to President Trump’s decision to hold off on further escalation over the weekend — even after he had signalled Friday that he would intensify the campaign. Israeli officials reportedly believe the calm is temporary and that Trump will soon be forced to escalate again.

Elsewhere in the region, Yemen’s Houthis struck Saudi Aramco-linked facilities in Jizan and Yanbu on Saturday, adding a new front to the disruption already affecting the Strait of Hormuz; the US military says it has redirected 12 commercial vessels attempting to breach its Iran blockade since it was renewed, disabling two and boarding two others for compliance checks. Oil prices reflected the volatility: Brent crude settled at $96.78 a barrel on Friday after briefly topping $100 overnight, while WTI settled at $89.31, both still up roughly 10 percent for the week.

On Wall Street, a near-flat session Friday saw the Dow gain 0.46 percent to 51,947.25, the S&P 500 edge up 0.05 percent to 7,411.98, and the Nasdaq slip 0.64 percent to 24,975.82, as investors weighed Iran-war risk against continued chip-sector weakness. The US Federal Reserve holds its rate at 3.5–3.75 percent under Chair Kevin Warsh, with a fifth consecutive hold expected at next week’s July 28–29 FOMC meeting, though rate-hike odds for later this year have risen alongside oil prices. Bitcoin traded around $64,000, within a $63,700–$65,400 range.

In diplomatic developments, President Trump is reported to have been irritated after his energy secretary announced a US-Saudi civil nuclear pact without prior approval, and has since publicly conditioned the deal on Saudi normalisation with Israel. Israeli forces killed the head of Hamas-led police in northern Gaza in a strike, while Lebanese officials confirmed the next round of talks on a full Israeli withdrawal from southern Lebanon will be held in Italy on August 4.

AI This Week: What “AI Layoffs” Actually Signal

US tech companies have cut nearly 140,000 jobs this year citing AI as a factor, according to a new Financial Times analysis — with Amazon, Oracle, Meta and Microsoft alone accounting for almost 50,000 of those cuts even as they pour hundreds of billions of dollars into AI infrastructure. Monday.com became the latest company to cite an “AI-driven growth strategy” this week in cutting 20 percent of its workforce.

The more interesting finding: companies that cite AI as a factor in layoffs have, on average, underperformed the Nasdaq by nearly 10 percent in the 30 trading days following their announcement — suggesting markets are skeptical that AI is the real driver behind many of these decisions. For Dhaka employers and employees alike, the practical takeaway is to treat “AI did it” as a claim to interrogate rather than accept — whether evaluating a severance package or justifying a restructuring plan to a board.

The ORAWEK Note

Ten years is a long time to wait for a groundbreaking ceremony. The Chinese economic zone in Anwara was signed in 2014, the land acquired in 2016, and only today does the first shovel actually go into the ground. There’s something oddly comforting about that timeline on a morning when the other headlines are about non-performing loans doubling and the trade gap widening — a reminder that some of what looks stalled is just slow, not dead. The discipline is in not confusing the two.

— Refat, Sunday morning, Dhaka