ADB projects modest growth for Bangladesh

 Bangladesh’s gross domestic product (GDP) will grow by 4.0% in fiscal year 2025-26 and 4.7% in FY27, up from 3.5% in FY25, according to the latest Asian Development Outlook (ADO) April 2026 of the Asian Development Bank (ADB), released on Friday.

The growth outlook reflects a recovery in consumption and investment as political uncertainty eases after the general election.

Temporary supply chain disruptions linked to conflict in the Middle East affected activity in the last quarter, but their impact is expected to fade, says the report.

ADB Country Director Hoe Yun Jeong said Bangladesh is facing a difficult economic environment, shaped by global uncertainties, domestic structural constraints, and pressures on the external and financial sectors.

“The new government’s reform agenda offers a timely opportunity to strengthen macroeconomic stability, restore private sector confidence, and support recovery,” he said. “With prudent policies and sustained reforms, the economy is well-positioned to reinforce resilience and return to a more inclusive growth path.”

Inflation is projected to remain elevated at 9.0% in FY26, despite some easing, reflecting persistently high global energy prices and ongoing supply disruptions. It is expected to moderate to 8.5% in FY27 as external shocks subside and domestic supply conditions improve.

The current account is anticipated to record a modest deficit of 0.5% of GDP in FY26, widening slightly to 0.6% in FY27, driven by stronger import demand and a broader trade deficit, according to the ADO.

Remittance inflows are expected to remain resilient in the near term, notwithstanding ongoing tensions in the Middle East, it says.

The ADO April 2026 projects moderate growth in consumption and investment, supported by strong remittance inflows and election-related public spending, alongside the government’s implementation of its pledges to promote investment and improve the ease of doing business.

On the supply side, services are expected to rebound, driven by improved household purchasing power, increased social protection spending, and ongoing financial sector reforms.

Agricultural output is projected to normalise, assuming favourable weather conditions and continued policy support. Industrial activity is also expected to strengthen, supported by export growth, easing supply constraints, and the government’s focus on infrastructure development and energy security.

Downside risks to the outlook remain substantial, particularly if the conflict prolongs. Disruptions to global energy markets, shipping routes, and supply chains could drive sustained increases in oil and gas prices, intensifying domestic inflationary pressures and complicating ongoing disinflation efforts, thereby constraining macroeconomic policy flexibility.

Higher energy prices could also widen the fiscal deficit, especially if energy-related subsidies increase or the pass through to consumers is delayed.

External sector pressures may rise as exports and remittances soften amid slower economic activity in key Persian Gulf economies, while elevated import costs and freight rates would further strain the current account amid already tight external liquidity.

Overall, the balance of risks is firmly tilted to the downside, underscoring Bangladesh’s vulnerability to external shocks in a context of still-fragile macroeconomic conditions.

Climate related shocks remain an additional, persistent risk, the ADO stated.