Bangladesh's GDP growth to recover to 4% in FY26, higher in FY27: ADB

Bangladesh's gross domestic product (GDP) is forecast to grow by 4.0% in fiscal year (FY) 2026 and 4.7% in FY2027, up from 3.5% in FY2025, according to the Asian Development Bank's (ADB) latest Asian Development Outlook April 2026 released today (10 April).

The growth outlook reflects a recovery in consumption and investment as political uncertainty eases after the general election. Temporary supply chain disruptions linked to conflict in the Middle East affected activity in the last quarter, but their impact is expected to fade, reads a press release. 

"Bangladesh is facing a difficult economic environment, shaped by global uncertainties, domestic structural constraints, and pressures on the external and financial sectors," said ADB Country Director Hoe Yun Jeong.

"The new government's reform agenda offers a timely opportunity to strengthen macroeconomic stability, restore private sector confidence, and support recovery, Hoe Yun Jeong said. "With prudent policies and sustained reforms, the economy is well-positioned to reinforce resilience and return to a more inclusive growth path," he added. 

Inflation is projected to remain elevated at 9.0% in FY2026, despite some easing, reflecting persistently high global energy prices and ongoing supply disruptions. It is expected to moderate to 8.5% in FY2027 as external shocks subside and domestic supply conditions improve, reads the ADB report. 

The current account is anticipated to record a modest deficit of 0.5% of GDP in FY2026, widening slightly to 0.6% in FY2027, driven by stronger import demand and a broader trade deficit. Remittance inflows are expected to remain resilient in the near term, notwithstanding ongoing tensions in the Middle East, adds the release.

The Asian Development Outlook April 2026 projects moderate growth in consumption and investment, supported by strong remittance inflows and election-related public spending, alongside the government's implementation of its pledges to promote investment and improve the ease of doing business. On the supply side, services are expected to rebound, driven by improved household purchasing power, increased social protection spending, and ongoing financial sector reforms. Agricultural output is projected to normalise, assuming favourable weather conditions and continued policy support. Industrial activity is also expected to strengthen, supported by export growth, easing supply constraints, and the government's focus on infrastructure development and energy security. 

The downside to the outlook remains substantial, particularly if the conflict is prolonged. Disruptions to global energy markets, shipping routes, and supply chains could drive sustained increases in oil and gas prices, intensifying domestic inflationary pressures and complicating ongoing disinflation efforts, thereby constraining macroeconomic policy flexibility.

Higher energy prices could also widen the fiscal deficit, especially if energy-related subsidies increase or the passthrough to consumers is delayed. External sector pressures may rise as exports and remittances soften amid slower economic activity in key Persian Gulf economies, while elevated import costs and freight rates would further strain the current account amid already tight external liquidity.

Overall, the balance of risks is firmly tilted to the downside, underscoring Bangladesh's vulnerability to external shocks in a context of still-fragile macroeconomic conditions. Climate-related shocks remain an additional, persistent risk.

However, the Manila-based lender has trimmed its growth outlook for Bangladesh, forecasting a 4% expansion for the current fiscal year, sharply down from 5.0% in September 2025 and 5.1% in April last year.

Moreover, the ADB forecast closely aligns with that of the World Bank. On Wednesday, the World Bank expected the country's economy to grow by 3.9% in the current fiscal year, before rising to 4.6% in FY27.

The World Bank warned that Bangladesh's economy faces significant challenges with slowing growth and rising poverty for three consecutive years, persistent inflation, a stressed banking sector, weak revenue mobilisation, and subdued private investment, which is further compounded by the headwinds from the conflict in the Middle  East.