Dhaka: Bangladesh’s medium-term economic outlook has improved, with growth expected to strengthen steadily over the next two fiscal years, according to the World Bank’s latest Global Economic Prospects report.
According to Bangladesh Sangbad Sangstha, the World Bank has revised its projections upward partly due to a stronger outlook for Bangladesh. The global financial institution now anticipates the country’s economic growth to rise to 4.6 percent in FY2025/26, with a further acceleration to 6.1 percent in FY2026/27. This positive revision reflects the strengthening of private consumption amid easing inflationary pressures, coupled with expectations of robust industrial activity and increased investment.
The report highlights that reduced political uncertainty following the general election in early 2026 and the anticipated implementation of structural reforms by a new government are expected to support industrial expansion in FY2026/27. These developments are projected to lead to faster public spending and investment growth than previously forecast.
The World Bank’s revised growth forecast for 2027 shows an increase of 0.3 percentage point compared to its June projections, mainly due to the upward revision for Bangladesh and better-than-expected performance in other economies. Globally, the World Bank notes that the economy is proving more resilient than anticipated, despite ongoing trade tensions and policy uncertainty. Global growth is projected to ease to 2.6 percent in 2026 before slightly increasing to 2.7 percent in 2027.
Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President for Development Economics, stated that the global economy is less capable of generating growth and more resilient to policy uncertainty with each passing year. He cautioned that the combination of slower growth and record levels of public and private debt could strain public finances and credit markets.
The report indicates that over the coming years, the global economy is set to grow more slowly than it did in the troubled 1990s, while managing historically high levels of public and private debt. To prevent stagnation and rising joblessness, governments in both advanced and emerging economies need to liberalise private investment and trade, control public consumption, and invest in new technologies and education.
In developing economies, growth is projected to slow to 4 percent in 2026 from 4.2 percent in 2025, before edging up to 4.1 percent in 2027 as trade tensions ease, commodity prices stabilise, and financial conditions improve. While low-income countries are expected to record relatively stronger growth, averaging 5.6 percent over 2026-27, supported by firmer domestic demand, recovering exports, and moderating inflation, the World Bank cautioned that per capita income growth in developing economies will remain insufficient to narrow the gap with advanced economies.
The report also underscores mounting fiscal pressures in developing economies, where public debt has reached its highest level in more than half a century. A special-focus chapter examined the role of fiscal rules, such as limits on deficits, debt, or expenditure, in restoring fiscal credibility and strengthening resilience to shocks. M Ayhan Kose, the World Bank Group’s Deputy Chief Economist and Director of the Prospects Group, emphasised the urgent priority of restoring fiscal credibility given the high levels of public debt in emerging and developing economies. He noted that while well-designed fiscal rules can help stabilise debt and rebuild policy buffers, their effectiveness depends on strong institutions, credible enforcement, and sustained political commitment.