IMF slashes Bangladesh FY26 growth forecast to 5.4% amid political uncertainty

The International Monetary Fund has lowered the GDP growth projection for Bangladesh to 5.4% for the fiscal year 2025-26 (FY26), down from the 6.5% it forecast earlier. 

In a statement issued after its Executive Board approved two new loan instalments worth US$1.3 billion, the IMF said it had downgraded the GDP growth projection due to persistent political uncertainty, a tight policy mix, rising trade barriers, and mounting stress in the banking sector in Bangladesh.

The global money lender also noted that political upheaval since the August 2024 uprising and the formation of an interim government has stabilised security conditions but not yet erased investor caution.

For the current fiscal year (FY25), IMF now expects GDP to grow 3.8%, weaker than the Bangladesh Bureau of Statistics’ provisional estimate of 3.97%.

Average annual inflation is projected to ease to 6.2% in FY26 from 9.9% in FY25.