Bangladesh's economy may move toward a gradual recovery path in the current FY27. However, the pace of that recovery will not be very rapid.
The Asian Development Bank (ADB) believes that growth will remain under pressure due to high inflation, weaknesses in the banking sector, the energy crisis, and global economic uncertainties.
In its updated Asian Development Outlook (ADO) report published on Thursday, the organization forecast that Bangladesh's Gross Domestic Product (GDP) growth will be 4.5% in the current fiscal year.
Although this is slightly higher than the estimated 3.7% growth of the recently concluded fiscal year, it remains significantly lower than past trends.
The report noted that economic growth in the last fiscal year was lower than expected due to high inflation, weak exports, stagnation in private investment, energy supply constraints, and an adverse global economic environment.
However, the ADB hopes that a slight moderation in inflation, easing of business regulations, improvements in governance, reforms in tax administration, and continued growth in remittance inflows could positively impact economic activities in the current fiscal year.
Nevertheless, the organization cautioned that economic recovery will not be easy. Weaknesses in the banking sector, shortages in energy supply, and limitations in Bangladesh's competitiveness in the international market will remain major obstacles to growth.
While the ADB kept its growth forecast unchanged for the current fiscal year, it raised its inflation forecast.
In the report published last April, average inflation for the 2026-27 fiscal year was projected at 8.5%. In the latest updated report, this has been increased to 8.8%.
According to the organization, inflation will decrease more slowly than expected due to rising prices of fuel, gas, and electricity, increased transportation costs, exchange rate pressures, and persistent inflation in the food and services sectors.
Akira Matsubaga, acting country director of the ADB's Bangladesh Resident Mission, said that despite difficult global and domestic conditions, robust remittance inflows and the resilience of the service sector are supporting Bangladesh's economy.
He added that to ensure sustainable long-term growth, it is crucial to maintain macroeconomic stability, improve the investment climate, establish good governance in the financial sector, and effectively implement reforms in the energy and infrastructure sectors.
The ADB further mentioned in the report that if conflicts in the Middle East intensify, international fuel prices and transportation costs could rise.
As a result, there is a risk of renewed pressure on inflation and external transactions.
In addition, the report highlighted that new tariffs or restrictions on global trade, economic slowdowns in major export markets, tight global financing conditions, and climate change risks also remain major challenges for Bangladesh's economy.