The Asian Development Bank (ADB) has projected a steady recovery for Bangladesh’s economy, forecasting GDP growth to reach 4% in fiscal year (FY) 2026 and accelerate to 4.7% in FY2027.
According to the Asian Development Outlook (ADO) April 2026, released on Friday, the forecast marks an improvement from the subdued 3.5% growth recorded in FY2025.
The outlook reflects a recovery in consumption and investment as political uncertainty eases following the general election.
Temporary supply chain disruptions linked to conflict in the Middle East affected activity in the last quarter, but their impact is expected to fade.
“Bangladesh is facing a difficult economic environment, shaped by global uncertainties, domestic structural constraints, and pressures on the external and financial sectors,” said ADB Country Director Hoe Yun Jeong.
“The new government’s reform agenda offers a timely opportunity to strengthen macroeconomic stability, restore private sector confidence, and support recovery,” he added.
“With prudent policies and sustained reforms, the economy is well-positioned to reinforce resilience and return to a more inclusive growth path,” he said.
Inflation is projected to remain elevated at 9% in FY2026 despite some easing, reflecting persistently high global energy prices and ongoing supply disruptions. It is expected to moderate to 8.5% in FY2027 as external shocks subside and domestic supply conditions improve.
The current account is expected to post a deficit of 0.5% of GDP in FY2026, widening slightly to 0.6% in FY2027, driven by stronger import demand and a broader trade deficit.
Remittance inflows are expected to remain resilient in the near term, despite ongoing tensions in the Middle East.
The ADO April 2026 projects moderate growth in consumption and investment, supported by strong remittance inflows and election-related public spending, alongside the government’s efforts to promote investment and improve the ease of doing business.
On the supply side, services are expected to rebound, driven by improved household purchasing power, increased social protection spending, and ongoing financial sector reforms.
Agricultural output is projected to normalize, assuming favorable weather conditions and continued policy support. Industrial activity is also expected to strengthen, supported by export growth, easing supply constraints, and the government’s focus on infrastructure development and energy security.
Downside risks to the outlook remain substantial, particularly if the conflict persists. Disruptions to global energy markets, shipping routes, and supply chains could push up oil and gas prices, intensifying domestic inflationary pressures and complicating disinflation efforts, thereby constraining macroeconomic policy flexibility.
Higher energy prices could also widen the fiscal deficit, especially if energy-related subsidies increase. External sector pressures may rise if exports and remittances weaken amid slower growth in key Persian Gulf economies, while elevated import costs and freight rates would further strain the current account.
Overall, the balance of risks remains tilted to the downside, underscoring Bangladesh’s vulnerability to external shocks amid still-fragile macroeconomic conditions. Climate-related shocks remain an additional persistent risk.