Bangladesh GDP Growth Seen at 3.7% in FY26: ADB

The Asian Development Bank (ADB) has lowered Bangladesh’s economic growth forecast, projecting the country’s gross domestic product (GDP) to expand by 3.7 per cent in fiscal year (FY) 2026 and 4.5 per cent in FY2027.

The revised projections were published in ADB’s Asian Development Outlook (ADO) July 2026, released on Thursday.

The latest forecast reflects weaker export performance, sluggish private investment, elevated energy costs, persistent inflation and a more challenging external environment.

“Bangladesh’s economy continues to show resilience amid a difficult global and domestic environment, supported by strong remittance inflows and steady services activity,” said Akira Matsunaga, Deputy Director (Officer-in-Charge) of ADB’s Bangladesh Resident Mission.

He said sustained reforms to strengthen macroeconomic stability, improve the investment climate, enhance financial sector governance, and address energy and infrastructure constraints would be critical to supporting a stronger and more inclusive recovery.

He said such reforms would also help attract greater private investment, create quality jobs and strengthen the country’s economic resilience.

ADB expects inflation to remain high at 9.0 per cent in FY2026, unchanged from its April forecast, as recent increases in domestic petroleum, gas and electricity prices continue to feed through to transport, utility and other consumer costs.

Inflation is projected to ease slightly to 8.8 per cent in FY2027, higher than the 8.5 per cent forecast in April, owing to second-round effects from higher energy and transport costs, exchange rate pass-through, and persistent food and services inflation.

The report said economic growth in FY2026 would be supported by strong remittance inflows, steady expansion of the services sector and targeted credit easing measures for priority sectors despite an overall tight macro-financial environment.

However, it noted that high inflation continues to erode household purchasing power and restrain private consumption, while weak exports and moderate import growth indicate subdued external demand and sluggish private investment.

On the supply side, export-oriented manufacturing is expected to remain under pressure from high energy prices, weak global demand and structural bottlenecks. Agriculture also faces risks from fertiliser shortages, although the services sector is likely to provide some support to growth through remittance-backed household spending.

For FY2027, ADB expects moderate inflation, simplified business regulations, improved governance, tax administration reforms and continued remittance incentives to support stronger consumption and investment.

Nevertheless, vulnerabilities in the banking sector, energy shortages and weak competitiveness are expected to keep economic expansion gradual.

ADB also warned of significant downside risks to the outlook.

It said any further escalation of the conflict in the Middle East could push up global energy and shipping costs, intensify external pressures, weaken growth through higher inflation and reduce remittance inflows.

The report added that higher global oil prices could widen Bangladesh’s import bill and increase fiscal pressure through larger energy subsidies, while higher tariffs, broader trade restrictions or weaker growth in major economies could further dampen export demand and prolong weakness in the manufacturing sector.

Persistent exchange rate pressures, tight external financing conditions and climate-related shocks also remain key risks to the country’s economic outlook.