The Asian Development Bank (ADB) has lowered its economic growth forecast for Bangladesh, projecting gross domestic product (GDP) growth at 3.7 percent in fiscal year (FY) 2026 and 4.5 percent in FY2027.
The revised projections were released in ADB’s Asian Development Outlook (ADO) July 2026 report on Thursday, citing weaker export performance, sluggish private investment, high energy costs, persistent inflation and a more challenging global economic 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 continued reforms to strengthen macroeconomic stability, improve the investment climate, enhance financial sector governance and address energy and infrastructure challenges would be crucial for a stronger and more inclusive economic recovery.
According to the report, such reforms could help attract private investment, create quality employment opportunities and improve Bangladesh’s economic resilience.
ADB expects inflation to remain elevated at 9 percent in FY2026, unchanged from its April projection, as recent increases in domestic fuel, gas and electricity prices continue to affect transport, utility and consumer costs.
Inflation is projected to ease slightly to 8.8 percent in FY2027, although the figure is higher than ADB’s previous forecast of 8.5 percent due to continued pressure from energy and transport costs, exchange rate effects, and persistent food and services inflation.
The report said economic growth in FY2026 would receive support from strong remittance inflows, steady expansion of the services sector and targeted credit measures for priority sectors despite a tight macro-financial environment.
However, it warned that high inflation is reducing household purchasing power and limiting private consumption, while weak exports and moderate import growth reflect subdued external demand and slower private investment.
On the supply side, export-oriented manufacturing is expected to remain under pressure due to high energy costs, weak global demand and structural challenges. Agriculture also faces risks from fertiliser shortages, while the services sector is expected to provide some support through remittance-backed household spending.
For FY2027, ADB expects improved business regulations, governance reforms, tax administration measures, moderate inflation and continued remittance incentives to support stronger consumption and investment.
The lender, however, cautioned that banking sector weaknesses, energy shortages and competitiveness challenges could slow the pace of economic expansion.
ADB also highlighted several downside risks, including a possible escalation of conflicts in the Middle East, which could raise global energy and shipping costs, increase inflationary pressure and affect remittance inflows.
The report said higher oil prices could increase Bangladesh’s import costs and put additional pressure on energy subsidies, while higher tariffs, trade restrictions and slower growth in major economies could weaken export demand.
Persistent exchange rate pressures, tight external financing conditions and climate-related shocks also remain major risks to Bangladesh’s economic outlook.
