Bangladesh’s economy is expected to recover gradually over the next two fiscal years, with growth projected to rise to 4.0% in FY2026 and 4.7% in FY2027, up from 3.5% in FY2025, according to the Asian Development Bank’s Asian Development Outlook (April 2026) released Wednesday.
The improved outlook reflects a recovery in domestic consumption and investment as political uncertainty eases following the general election, alongside expectations of improved confidence among private sector participants.
Although economic activity slowed in the final quarter due to temporary supply chain disruptions linked to tensions in the Middle East, the impact is expected to fade in the coming months.
ADB Country Director Hoe Yun Jeong said Bangladesh is operating in a “challenging economic environment” shaped by global uncertainty, domestic structural constraints, and pressures in both external and financial sectors.
He added that the new government’s reform agenda presents an opportunity to strengthen macroeconomic stability, restore private sector confidence, and support recovery.
Inflation is projected to remain elevated at around 9% in FY2026, driven by high global energy prices and lingering supply disruptions. It is expected to ease slightly to 8.5% in FY2027 as external pressures moderate and domestic supply conditions improve.
The current account deficit is forecast at 0.5% of GDP in FY2026, widening marginally to 0.6% in FY2027 due to stronger import demand and a larger trade gap.
Despite geopolitical tensions in the Middle East, remittance inflows are expected to remain broadly stable in the near term.
ADB said growth will be supported by steady household consumption, election-related public spending, and ongoing efforts to improve the business climate and attract investment.
On the supply side, services are expected to rebound as household purchasing power improves, supported by social protection measures and financial sector reforms. Agriculture is projected to remain stable, assuming favorable weather and policy support, while industry is expected to strengthen with export recovery and easing supply constraints.
However, the outlook remains exposed to significant downside risks. A prolonged Middle East conflict could disrupt energy markets, shipping routes, and global supply chains, pushing up fuel and freight costs.
Such shocks could intensify inflation, widen fiscal deficits, and further strain external balances.
The report also warned that slower growth in Gulf economies could weaken remittances and export demand, while higher import costs could pressure already tight foreign exchange conditions.
ADB concluded that risks remain tilted to the downside, underscoring Bangladesh’s vulnerability to external shocks, including long-term climate-related challenges.
Bd-pratidin English/ Jisan
