WB cuts FY25 growth forecast to 3.3%

The World Bank has downgraded its outlook for Bangladesh, predicting economic growth of just 3.3% for the current fiscal 2024-25, down from the January forecast of 4.1%, amid political uncertainty and persistent financial challenges.

Released today, in its latest South Asia Development Update, the World Bank also warned the 12-month average inflation in the country to hit 10% in FY25.

"This primarily reflects the disruptions arising from last summer's social unrest and political tensions. It also reflects the trade disruptions, the persistence of inflation, worsening bank health, governance challenges, and general uncertainty about the country's political future, all of which will contribute to an expected decline in investment."

The World Bank's growth outlook for the current fiscal year stands out as the gloomiest among other recent forecasts.

Just a day earlier, the International Monetary Fund forecasted 3.8% GDP growth and inflation to hit 10% in FY25.

Meanwhile, the Asian Development Bank, in its earlier projection this month, placed the current year's growth at 3.9% with inflation at 10.2%.

South Asia's growth prospects dimming amid global uncertainty

Amid increasing uncertainty in the global economy, South Asia's growth prospects have weakened, with projections downgraded in most countries in the region, said the World Bank.

Stepping up domestic revenue mobilization could help the region strengthen fragile fiscal positions and increase resilience against future shocks, said in its twice-yearly regional outlook.

It projected regional growth to slow to 5.8% in 2025—0.4 percentage points below October projections—before ticking up to 6.1% in 2026.

This outlook is subject to heightened risks, including from a highly uncertain global landscape, combined with domestic vulnerabilities including constrained fiscal space.

Martin Raiser, World Bank Vice President for South Asia, said, "Multiple shocks over the past decade have left South Asian countries with limited buffers to withstand an increasingly challenging global environment."

"The region needs targeted reforms to strengthen economic resilience and unlock faster growth and job creation. Now is the time to open to trade, modernize agricultural sectors, and boost private sector dynamism."