Dhaka:The Asian Development Bank (ADB) has revised its economic growth forecast for Bangladesh, reducing it to 4.0% for fiscal year 2027 from an earlier projection of 4.5%, while forecasting a 3.7% growth for fiscal year 2026.
According to United News of Bangladesh, the ADB's report titled "Asian Development Outlook (ADO) September 2026" indicates that economic activity in Bangladesh slowed in the final quarter of fiscal year 2026. This slowdown was attributed to supply chain disruptions caused by the conflict in the Middle East, though the report expects the impact to be limited.
The report also reflects a slightly improved growth outlook due to stronger consumption and investment, spurred by a reduction in political uncertainty following the general election in early 2026. However, inflation rates, which eased to an estimated 8.7% in fiscal year 2026 from 10.0% in the previous year, are expected to rise again to 9.0% in fiscal year 2027.
Inflationary pressures are anticipated to persist, driven by energy shortages, high production and transport costs, potential shipping disruptions, and the delayed effects of El Ni±o on food prices. The current account deficit is projected to widen to 0.6% of GDP in fiscal year 2027 from an estimated 0.3% in fiscal year 2026, due to import growth outpacing exports.
Despite geopolitical tensions in the Middle East, remittance inflows are expected to remain robust. These, alongside higher foreign exchange reserves, are seen as key factors in supporting external stability. However, maintaining this stability will rely on sufficient financial inflows, exchange rate flexibility, and prudent macroeconomic management.
The services and agriculture sectors are predicted to bolster growth in fiscal year 2027, whereas industry and investment are likely to face challenges due to high borrowing costs, limited access to credit, energy shortages, and weak external demand. Private consumption, fueled by remittances, will continue to drive growth, although high inflation may erode household purchasing power.
The ADB report also warns of significant downside risks, such as a prolonged conflict in the Middle East, rising oil prices, disruptions to global shipping, tighter trade restrictions, lower growth in major export markets, and climate-related shocks, all of which could suppress growth and sustain inflation.
ADB Country Director Qingfeng Zhang remarked on the fragile state of Bangladesh's economic recovery, emphasizing the need for accelerated reforms in macroeconomic management, the financial sector, energy security, and the business environment. He affirmed ADB's commitment to supporting Bangladesh in implementing these reforms to achieve tangible benefits for its citizens.