ADB lowers Bangladesh’s growth forecast to 4 per cent

The Asian Development Bank has lowered its economic growth forecast for Bangladesh for the 2026-27 fiscal year to four per cent. 

In a forecast issued last July the organisation had projected growth at 4.5 per cent.

According to the ADB’s latest Asian Development Outlook report published on Wednesday, economic activity slowed in the final quarter of the 2025-26 fiscal year because of supply chain disruptions linked to the conflict in the Middle East, although the organisation noted that the impact might be limited.

The ADB also issued a warning on inflation. Although inflation is expected to fall from 10 per cent in the 2024-25 fiscal year to 8.7 per cent in 2025-26, it could rise again to 9 per cent in 2026-27 because of fuel shortages, high production and transportation costs, and the impact of El Niño on food prices. 

The current account deficit is projected to widen from 0.3 per cent to 0.6 per cent of GDP as import growth outpaces export growth.

The ADB stated that the services and agriculture sectors will primarily drive growth in the 2027 fiscal year. Robust remittance inflows, persisting despite tensions in the Middle East, will act as a key driver of private consumption growth and, combined with healthy foreign exchange reserves, help maintain external stability.

However, the industrial and investment sectors could face headwinds from high borrowing costs, limited credit availability, energy shortages and weak external demand. 

The report notes that high oil prices, global shipping disruptions, pressures on the banking sector, delays in fiscal reforms and climate-related shocks pose significant downside risks to the country’s growth.

Commenting on the overall outlook, ADB Country Director Jiangfeng Zhang said that while Bangladesh’s economy has begun to recover, it remains vulnerable to external shocks and domestic constraints.

“This is a critical time to accelerate reforms in macroeconomic management, the financial sector, energy security and the business environment,” he said. “These reforms are essential to unlock private investment, create quality jobs and advance on a path of inclusive and resilient growth.”

He affirmed that the ADB stands ready to support Bangladesh in translating these reforms into tangible results for the people.