The Asian Development Bank (ADB) has lowered its economic growth forecast for Bangladesh, projecting gross domestic product (GDP) growth of 3.7 per cent in fiscal year (FY) 2026 and 4.5 per cent in FY2027.
The revised projections were published in the ADB’s Asian Development Outlook (ADO) of July 2026, released on Thursday. The lender attributed the downgrade to weaker exports, sluggish private investment, high energy costs, persistent inflation and a more challenging global 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 essential for a stronger and more inclusive recovery. He added that such measures would also help attract private investment, create quality jobs and strengthen the country’s economic resilience.
ADB expects inflation to remain at 9.0 per cent in FY2026, unchanged from its April forecast, as higher domestic prices for petroleum, gas and electricity continue to push up transport, utility and other consumer costs. Inflation is forecast to ease slightly to 8.8 per cent in FY2027, higher than the 8.5 per cent projected in April, reflecting the continued impact of 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 for priority sectors despite tight macro-financial conditions. However, it warned that high inflation continues to weaken household purchasing power and limit private consumption, while weak exports and modest import growth point to subdued external demand and sluggish private investment.
On the supply side, export-orientated manufacturing is expected to remain under pressure from high energy prices, weak global demand and structural constraints. Agriculture also faces risks from fertiliser shortages, although the services sector is likely to continue supporting growth through remittance-driven household spending.
For FY2027, the ADB expects moderate inflation, simpler business regulations, improved governance, tax administration reforms and continued remittance incentives to support stronger consumption and investment. Even so, weaknesses in the banking sector, energy shortages and low competitiveness are expected to keep economic growth gradual.
The lender also warned of significant downside risks. It said any escalation of the conflict in the Middle East could drive up global energy and shipping costs, increase external pressures, fuel 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. It also warned that higher tariffs, broader trade restrictions or weaker growth in major economies could further reduce export demand and prolong weakness in the manufacturing sector. Persistent exchange rate pressures, tighter external financing conditions and climate-related shocks were identified as additional risks to the country’s economic outlook.
