The Asian Development Bank (ADB) has cut Bangladesh’s economic growth forecast for fiscal year 2027 (FY27) to 4 per cent, citing persistent inflation, energy shortages, weak investment and external risks, while estimating a slower 3.7 per cent expansion for FY26.
The revised FY27 projection is down from ADB’s previous forecast of 4.5 per cent, according to the bank’s latest Asian Development Outlook (ADO) September 2026, released on Wednesday.
ADB said economic activity slowed in the final quarter of FY26 due to supply chain disruptions linked to the Middle East conflict, although the overall impact is expected to remain limited.
The bank expects growth to improve in FY27 as political uncertainty eased after the general election in early 2026, supporting stronger consumption and investment.
However, industrial activity and private investment are likely to remain under pressure from high borrowing costs, limited access to credit, energy shortages, weak external demand and structural constraints, the report said.
Private consumption, supported by strong remittance inflows, is expected to remain the main driver of growth. But elevated inflation will continue to weaken household purchasing power.
Inflation eased to 8.7 per cent in FY26 from 10 per cent in FY25, but ADB projected it to rise slightly to 9 per cent in FY27.
The bank said inflation would remain high due to energy shortages, rising production and transport costs, possible shipping disruptions, delayed impacts of El Niño on food prices and a gradual easing of monetary policy.
The current account deficit is projected to widen to 0.6 per cent of GDP in FY27 from an estimated 0.3 per cent in FY26, as import growth is expected to outpace export growth.
Despite ongoing tensions in the Middle East, ADB expects remittance inflows to remain resilient. Strong remittances and higher foreign exchange reserves are expected to support external stability, although maintaining stability will depend on adequate financial inflows, exchange rate flexibility and prudent macroeconomic management.
The services and agriculture sectors are expected to provide support to economic growth in FY27, according to the report.
ADB identified several downside risks to the outlook, including a prolonged Middle East conflict, higher oil prices, further global shipping disruptions, tighter trade restrictions, weaker growth in major export markets, continued exchange rate pressures, additional stress in the banking sector, delays in fiscal reforms, lower-than-expected development spending and climate-related shocks.
ADB Country Director for Bangladesh Qingfeng Zhang said the economy was showing signs of recovery but remained vulnerable to external shocks and domestic constraints.
“This is an important moment to accelerate reforms in macroeconomic management, the financial sector, energy security and the business environment,” he said.
“These reforms will be essential to unlock private investment, create quality jobs and place Bangladesh on a stronger, more inclusive and resilient growth path.”
Zhang said ADB was ready to support Bangladesh in turning these reforms into tangible outcomes for the people.
