The World Bank on Wednesday downgraded its outlook for Bangladesh, predicting economic growth of just 3.3% for the current FY25, down from the January forecast of 4.1%, amid political uncertainty and persistent financial challenges.
The global lender, in its latest South Asia Development Update, also warned the 12-month average inflation in the country to hit 10% in FY25.
"This primarily reflects the disruptions arising from last summer's social unrest and political tensions. It also reflects the trade disruptions, the persistence of inflation, worsening bank health, governance challenges, and general uncertainty about the country's political future, all of which will contribute to an expected decline in investment."
The World Bank's growth outlook for the current fiscal year stands out as the gloomiest among other recent forecasts.
Amid increasing uncertainty in the global economy, South Asia's growth prospects have weakened, with projections downgraded in most countries in the region, said the World Bank.
Stepping up domestic revenue mobilization could help the region strengthen fragile fiscal positions and increase resilience against future shocks, said in its twice-yearly regional outlook.
It projected regional growth to slow to 5.8% in 2025—0.4 percentage points below October projections—before ticking up to 6.1% in 2026.
The Asian Development Bank (ADB), in its earlier projection this month for Bangladesh, placed the current year's growth at 3.9% with inflation at 10.2%.
IMF hopeful of recovery
Bangladesh’s economy was showing signs of recovery, with the latest forecast from the International Monetary Fund (IMF) projecting a significant upturn.
In its World Economic Outlook released on Tuesday night (Washington time), the IMF projected a GDP growth of 3.8% for Bangladesh in the current FY25.
The outlook further anticipated an increase in growth to 6.5% in the following fiscal year (2025-26), reported UNB.
The report was unveiled on the second day of the World Bank-IMF Spring Meetings, currently taking place in Washington, US.
Alongside global trends, the IMF updated country-specific data in this outlook. It projected inflation in Bangladesh to remain at 10%.
The country has been grappling with persistent inflationary pressure over the past two years.
According to the Bangladesh Bureau of Statistics (BBS), inflation stood at 9.35% in March, with an annual average of 10.26% over the past year.
The Awami League government initially targeted a GDP growth rate of 6.75% when it presented the budget for FY25 in June.
But the interim administration recently revised the target downward to 5.25%, citing ongoing financial challenges, business stagnation, and political instability following the change in government.
Globally, the IMF expects average GDP growth to be 2.8%, while the average for Asia is forecast to be 4.5%.
