The Asian Development Bank (ADB) has projected a 5% GDP growth for Bangladesh in the fiscal year 2025-26, up from an expected 4% growth in FY2025, according to the Asian Development Outlook (ADO) September 2025 report released on Tuesday.
Despite resilient garment exports, the growth estimate for FY2025 reflects subdued domestic demand, influenced by ongoing political transitions, recurrent flooding, industrial labour disputes, and persistently high inflation. The economy expanded by 4.2% in FY2024.
“Future growth will rely on enhancing the business environment to improve competitiveness, attract investment, and ensure reliable energy supplies,” said Hoe Yun Jeong, ADB Country Director for Bangladesh.
He added, “The impact of US tariffs on Bangladesh’s trade remains uncertain, and vulnerabilities in the banking sector persist. Addressing these challenges is crucial for higher economic performance.”
Jeong noted that downside risks to the FY2026 outlook remain, including trade uncertainties, banking sector weaknesses, and potential policy slippages. He emphasized the need for maintaining prudent macroeconomic policies and accelerating structural reforms to build resilience.
Inflation is projected to rise from 9.7% in FY2024 to 10.0% in FY2025, driven by limited competition in wholesale markets, inadequate market information, supply chain constraints, and the depreciation of the taka.
The current account is expected to post a small surplus of 0.03% of GDP in FY2025, a recovery from the deficit of 1.5% in FY2024, supported by a narrowing trade gap and strong remittance inflows.
Looking ahead, the ADO September 2025 forecasts consumption as the primary growth driver in FY2026, bolstered by strong remittance inflows and election-related spending. However, contractionary monetary and fiscal policies, along with increased investor caution, are expected to dampen investment.
Global tariff hikes, including a 20% tariff on Bangladesh exports to the US, and heightened competition in the EU are expected to affect exports and growth. Exporters may be compelled to reduce unit prices in response to increased competition.
On the supply side, services are expected to expand, driven by improved household purchasing power. Agricultural growth is likely to stabilize, contingent on favourable weather and effective government policies. In contrast, industrial growth may slow due to the impact of US tariffs on economic activity.
ADB, founded in 1966, is a leading multilateral development bank supporting sustainable, inclusive, and resilient growth across Asia and the Pacific. It works with its members and partners to address complex challenges, harness innovative financial tools, and promote quality infrastructure and environmental protection.
