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Food's Share of Spending Rises as Income Falls
An IMF chart, built on USDA data, plots food spending as a share of GDP against food's share of total consumer spending. Poorer economies sit further up and further right on both scales.
- ▸Advanced economies hold the bottom-left corner. Food takes roughly 5 to 22 percent of consumer spending in that group, on food outlays worth under about 13 percent of GDP.
- ▸Emerging markets spread across the whole middle of the chart. Their markers run from about 11 percent of consumer spending to above 40 percent, and the group overlaps the advanced cluster at one end and the low-income band at the other.
- ▸Low-income developing countries occupy the top-right. Every marker in that group sits above roughly 29 percent of consumer spending, and the highest of them approach 55 percent.
A household that already spends half its money on food has no cheaper category to move into, so a price rise comes out of everything else it buys. The IMF places Bangladesh in the low-income group at the upper right of this chart. Food and beverages carry the largest single weight in the Bangladesh CPI basket, which is the same fact seen from the other side.
Food inflation belongs in the credit process, not only in the macro commentary. A price move reaches disposable income before it reaches any borrower's file, and the thinnest-buffer books — retail, microfinance-linked exposure, small-ticket SME — feel it first. A risk team reading food prices only off the monthly CPI print is working from the slowest signal available.
Policy & Rates (Bangladesh Bank)
On hold — refinance scheme injects liquidity, not solvency.
WATCH
- ◆Next MPC date and May CPI print
- ◆Reserves cycle: weekly net change vs $400M draw threshold
RISK
- ▼Refinance-fueled lending into NPL-heavy books widens provisioning gap
- ▼Reserves below $33B AND USD/BDT past 123 triggers NOSTRO drawdown halt
Banking
Stress unchanged — the capital cushion remains functionally zero.
WATCH
- ◆FY26 budget recapitalisation allocation
- ◆Top-50 classified exposures: provisioning shortfall trajectory
RISK
- ▼CAR below 2.0% on next disclosure triggers prompt corrective action
- ▼Refinance lending into NPL-heavy books compounds provisioning gap
The 35.73% NPL ratio and 1.56% CAR are unchanged — and that stability is the problem. BB's Tk 40,000cr refinance scheme, surfaced today, injects liquidity into the same balance sheets carrying the provisioning shortfall. The scheme does not address capital adequacy; it extends the operational timeline of institutions that are, in functional terms, post-solvent. Provisioning shortfall at BDT 1.4tn against a sector capital base of roughly BDT 1.6tn means the gap is structural, not cyclical. The FY26 budget is the next decision point — absent a credible recapitalisation line, the market will reprice Tier-2 counterparty risk before the government acts. Each quarter of delay compounds the fiscal cost without buying time the sector can use.
FX & External
Pin holds — export surge buys time, not equilibrium.
WATCH
- ◆Buy-sell spread widening past 0.50 BDT
- ◆BB mid breach above 123.50
RISK
- ▼Pre-position EUR/GBP payables before next reserves print
- ▼Cap net open USD position at 80% of prudential limit
April's +33% export surge and the first positive trade gap in 14 months ease near-term pressure on the peg, but the FX book's structural risk has not changed. USD/BDT at 122.75 with zero dealer spread means the rate is administratively managed, not market-discovered. Reserves at $34.12B cover roughly 3.5 months on the headline measure — sub-3 months stripping out swaps and IFI buffers. The export rebound is RMG-driven and front-loaded; whether it sustains through Q2 depends on European retailer order confirmation. Remittances at $2.89B keep the inflow base solid but not exceptional. Pre-positioning EUR and GBP payable capacity remains cheap insurance against a repricing that, if it comes, will not come gradually.
DSE Markets
Volume thin, breadth negative — floor-price debate adds noise.
WATCH
- ◆DSEX breach below 5,220 on turnover above BDT 1,200cr
- ◆BSEC floor-price decision on Beximco, Islami Bank
RISK
- ▼Activate enhanced haircut buffers on pledged-share collateral
- ▼Cap new proprietary allocation to listed banks at 8% of portfolio
T-Bonds & T-Bills
Curve pricing rate relief — 5y sits below the 364d bill.
WATCH
- ◆91d cut-off breach above 10.50% at next auction
- ◆5Y yield re-steepening above 364d
RISK
- ▼Extend SLR-eligible holdings into 5y bucket at 10.23%
- ▼Cap new 364d allocations at 15% of trading portfolio
Macro & Inflation
Headline sticky, food easing marginally — no fresh GDP print.
WATCH
- ◆Next BBS monthly release for May CPI
- ◆Food inflation: rice wholesale trajectory at DAM
RISK
- ▼CPI breach of 9.0% triggers supervisory letter
- ▼Rotate origination toward floating-rate ahead of curve
Iran War & Oil
Brent ticks lower — second-incident risk remains unpriced.
WATCH
- ◆Brent breach of $115 with no OPEC+ response within 48h
- ◆Any second Hormuz tanker incident
RISK
- ▼Cap energy-sector LC issuance at 90-day tenor
- ▼Require 110% cash margin on fuel imports above $5m
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