S&P Global Ratings has revised Bangladesh's long-term sovereign credit outlook from stable to negative, citing persistent banking sector weaknesses, sticky inflation and uncertainty in global energy markets.
The agency, however, affirmed Bangladesh's sovereign credit ratings at 'B+/B'.
S&P said the country's economic recovery faces mounting pressure as structural problems in the banking sector continue to weigh on private sector lending and growth.
It forecast Bangladesh's real GDP growth to average around 4.5 per cent over the next three years, significantly below the country's historical pace.
The rating agency also noted that Bangladesh's 10-year weighted average real per capita GDP growth had fallen to 3.3 per cent, from 5.8 per cent in 2022.
Despite the downgrade in outlook, S&P said the country's external position had improved.
Foreign exchange reserves recovered to $32.9 billion by the end of FY2026, supported by a 19 per cent rise in remittances, providing about 4.5 months of import cover.
However, it warned that volatile global energy prices, West Asia trade disruptions and weaker garment exports could put renewed pressure on the economy.
Readymade garment exports fell 2.6 per cent in the first 11 months of FY2026.
S&P also highlighted Bangladesh's low tax-to-GDP ratio and rising debt-servicing costs, saying interest payments now consume nearly 30 per cent of government revenue.
The agency said failure to strengthen growth and stabilise external debt could lead to a future credit rating downgrade.