The 12-month average inflation in Bangladesh is expected to accelerate further to 10.2% in FY25, from 9.7% in FY24 and 9.0% in FY23, amid supply-side disruption and higher import costs due to Taka’s depreciation, said the Asian Development Bank (ADB) on Wednesday.
The global lender released a report titled “Asian Development Outlook (ADO) April 2025,” where they also said that Bangladesh's gross domestic product (GDP) is projected to grow by 3.9% in FY25 before increasing to 5.1% in FY26.
However, Bangladesh's economic growth was 4.2% in FY24.
The report about was presented on Wednesday at the ADB office in Dhaka.
Despite growth in Bangladesh's exports in the garments sector, the slower growth forecast reflects weaker domestic demand amid political transition, risks of natural disasters, industrial unrest, and high inflation.
Bangladesh’s current account deficit is anticipated to shrink from 1.4% of GDP in FY24 to 0.9% of GDP in FY25 as the trade deficit narrows and remittances rise, according to the report.
The report further added that agricultural growth is likely to be moderate following repeated floods, while industry growth is expected to improve marginally with a rebound in manufacturing aided by export growth.
“Despite external and domestic headwinds, Bangladesh's economy remains resilient, which can be fortified by implementing crucial structural reforms,” said ADB Country Director for Bangladesh Hoe Yun Jeong.
"There are downside risks to the economic outlook. The growth could be hit by high inflation, prolonged monetary tightening, political uncertainty, adverse weather events, and a global economic slowdown sparked by the USA's sweeping tariffs," he explained.
“Bangladesh should diversify its economy beyond the readymade garments sector by fostering private sector development. Enhancing resilient infrastructure, improving energy security, strengthening financial sector governance, and attracting foreign investment are crucial to accelerating growth, creating jobs, and boosting competitiveness,” he added.
Regarding macroeconomic development, the ADB country director for Bangladesh said: “We project further slowing of economic growth in FY25 compared to FY24, but anticipate recovery in FY26 with the improvement of domestic demand.”
The director also addressed the ongoing challenges, saying that inflation would likely remain high and that monetary policy will continue to be tight. He also asked Bangladesh to focus on resolving banking sector vulnerabilities, including rising non-performing loans.
However, he expressed optimism about public investment, saying: “We also expect an improvement in public investment management, particularly in enhancing project readiness and implementation capacities.”
“Despite facing global challenges, Bangladesh's economy remains resilient. The country must fortify this resilience by implementing essential reforms to sustain higher growth. Implementing these reforms swiftly is vital as the country is scheduled to graduate from the least developed country status in November 2026,” he said in his concluding remarks.
Chandan Sapkota, country economist, presented the keynote presentation. He also suggested reform and said: “Reforms in investment policy and business-friendly environment are critical to attract investment, boost competitiveness, and ensure smooth and sustainable LDC graduation.”
The economist also emphasized streamlined reform to attract FDI and boost private investment, simplifying licensing and business procedures, improving inter-agency and policy coordination, and leveraging BICIP to cut red tape and improve regulatory transparency.
Citing that risks remain elevated, Chandan said full implementation of the US tariff announced in early April and further US trade policy shifts could worsen the outlook, and large uncertainties remain.