Bangladesh’s rapid growth fuels surge in energy demand, fossil dependence: ADB

Rapid development in Bangladesh has driven energy demand and increased dependence on fossil fuel, said the Asian Development Bank (ADB) in its annual report 2025, released on Thursday.

An ADB study released in 2025 examined the country's clean energy transition and future low-carbon pathways.

The bank's modeling shows that a shift toward low-carbon solutions is achievable but will require strong policy support, investment, and behavioral change.

Bangladesh's inadequate transport infrastructure continues to raise business costs, reduce competitiveness, and limit regional trade, said the leading multilateral development bank in its annual report.

In 2025, ADB committed $688 million to upgrade and construct a key section of railway between Chattogram and Dohazari, which is part of a South Asia Subregional Economic Cooperation corridor.

This investment will help improve passenger and freight movement, support resilient railway operations, and introduce energy-efficient locomotives, according to the report.

With training for railway staff further enhancing safety and operational standards, the improved connectivity is expected to reduce travel times, increase intraregional trade, and support Bangladesh's goal of becoming a regional transport hub, said the lending agency.

The banking sector dominates Bangladesh's financial system, but years of weak governance, inadequate oversight, and poor capitalisation have hindered its ability to deliver efficient and inclusive services, ADB said.

These issues constrain access to credit, especially for small and medium-sized enterprises, and limit financial inclusion for many households.

In 2025, ADB provided $500 million to strengthen Bangladesh's banking supervision, improve governance and asset quality, and modernise liquidity management.

The programme will encourage digitalisation and expand access to affordable finance to drive stronger growth in the private sector and help stabilise the banking sector.

In Cox's Bazar, Bangladesh continues to host more than 1 million displaced people from Myanmar, placing a heavy strain on local infrastructure and services.

ADB reaffirmed its support with a $58.6 million grant from the Asian Development Fund and a $28.1 million loan to upgrade migrant camp facilities and improve infrastructure in host communities.

This includes expanding access to safe water and sanitation and installing 12,500 solar-powered streetlights to improve safety, particularly for women and children.

By reducing pressure on local resources, the project will help improve cohesion between camp residents and their host communities.

The garment industry is the backbone of Bangladesh's economy, generating more than 80% of export earnings.

As global buyers demand greener production, textile manufacturers face mounting pressure to modernize operations and reduce environmental impacts, ADB said.

The ADB committed $29.3 billion from its own resources in 2025 while advancing key institutional reforms to help Asia and the Pacific navigate change and turn challenges into opportunities.

ADB's Annual Report 2025 summarised the bank's operational, institutional, and financial highlights in 2025, a year marked by complexity and uncertainty.

"In 2025, ADB delivered unprecedented levels of support, with a 20% increase over 2024 and expected impacts of more than 3.3 million jobs and benefit to over 180 million people," said ADB President Masato Kanda. "This shows ADB's ability to deliver at a scale and with the speed that matches the demands of Asia and the Pacific."

Loans, grants, equity investments, guarantees, and technical assistance provided to governments and the private sector increased by 20% year-on-year to $29.3 billion. This was boosted by an additional $14.7 billion from partners.

Private sector development was a key priority for ADB in 2025 comprising $5.5 billion of its commitments, while half of its public sector commitments directly supported infrastructure, reforms, and institutions to unlock private investments.

ADB is uniquely equipped to support private sector development as its public and private sector operations are under one roof, form one legal entity, and share one balance sheet.

ADB committed $8.3 billion in Central West Asia, $1.4 billion in East Asia, $680 million in the Pacific, $9.7 billion in South Asia, and $9 billion in Southeast Asia, with $302 million allocated to regional projects. Finance, transport, and public sector management were the top three sectors to receive funding.

ADB approved groundbreaking institutional reforms in 2025 to deliver high-quality and well-targeted support to developing member countries.