World Bank projects Bangladesh GDP growth to slow to 3.9pc in FY 25-26

The World Bank has drawn a challenging economic landscape for Bangladesh as it has projected the GDP growth slows down to 3.9 per cent from its earlier projection for the fiscal year (FY) 2025-26.

The Bank warned of the Middle-East conflict saying it is projected to push an additional 1.2 million Bangladeshi people below the poverty line, largely offsetting any potential gains, latest Bangladesh Development Update-Spring 2026 report reveals.

This downward revision of the Bangladesh’s Gross Domestic Product (GDP) growth to 3.9 per cent for the current fiscal from an earlier projection of 4.6 per cent is attributed to the compounding effects of the ongoing Middle East conflict and persistent domestic macroeconomic fragilities, the development update said.

The WB Bangladesh office in Dhaka unveiled the Bangladesh Development Update-Spring 2026 on Wednesday.

“Real GDP growth is projected to remain subdued at 3.9 per cent in FY2026—0.7 percentage points lower than the earlier projection of 4.6 per cent in the Global Economic Prospects 2026—reflecting the spillover effects of the Middle

East conflict, alongside a pre‑existing slowdown in export growth and continued weakness in both public and private investment,” the WB senior economist Dhruv Sharma said.

While growth is expected to recover moderately from the 3.5 per cent in FY2025—when it fell to its lowest level since the COVID‑19 pandemic amid student-led protests and political transition—it will remain well below the decade average of 6.3 per cent, the WB report said.

“The modest recovery in FY2026 is expected to be driven primarily by private consumption, supported by strong remittance inflows.”

Net exports are projected to constrain growth, as imports increase with higher energy import payments resulting from the Middle East conflict and export momentum softens, it said.

Over the medium term, growth is expected to strengthen gradually, contingent on improved business confidence and the acceleration of structural reforms, the WB report added.

The Bangladesh Development Update report identifies a third consecutive annual slowdown, with growth having reached a post-pandemic low of 3.5 per cent in FY2025.

Private investment saw its first negative growth in 35 years during FY2025, declining by 3.6 per cent due to heightened political uncertainty and elevated borrowing costs.

The Rising global energy prices and potential exchange rate depreciation are expected to add further pressure to already elevated inflation and fiscal balances, it said.

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