The World Bank has sharply downgraded its economic growth forecast for Bangladesh, predicting just 3.3% GDP growth for the fiscal year 2024–25, down from its January projection of 4.1%.
This marks the gloomiest outlook among major development agencies and underscores growing concerns over the country’s economic stability.
In its South Asia Development Update, released on Wednesday, the World Bank cited a combination of political uncertainty, social unrest, and persistent financial challenges as key reasons for the downgrade.
“This primarily reflects the disruptions arising from last summer’s social unrest and political tensions. It also reflects trade disruptions, persistent 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 report stated.
Alongside the bleak growth outlook, the World Bank also warned that 12-month average inflation in Bangladesh is likely to hit 10% in FY25, signalling prolonged cost-of-living pressures for citizens.
Comparative forecasts
The World Bank’s forecast stands as the lowest among international financial institutions: The International Monetary Fund (IMF), in a forecast released just a day earlier, predicted 3.8% GDP growth and 10% inflation for FY25 and The Asian Development Bank (ADB), in its early April projection, estimated 3.9% growth with 10.2% inflation.
Regional outlook also dampened
The World Bank also noted that South Asia’s overall growth prospects have dimmed amid global economic uncertainties. The region is now projected to grow by 5.8% in 2025 — 0.4 percentage points lower than earlier estimates — before rebounding slightly to 6.1% in 2026.
“Multiple shocks over the past decade have left South Asian countries with limited buffers to withstand an increasingly challenging global environment,” said Martin Raiser, World Bank Vice President for South Asia.
He added that the region must implement targeted reforms to strengthen resilience and stimulate growth, including trade liberalisation, agricultural modernisation, and private sector development.
The report emphasised that stepping up domestic revenue mobilisation would be key for governments in the region to strengthen fragile fiscal positions and build resilience against future shocks.
IMF’s Global forecast
Meanwhile, President Trump’s trade war is expected to slow economic growth across the globe this year, the International Monetary Fund said in a major report.
The gloomier outlook stems in large part from the impact of tariffs on the U.S. economy, which is expected to see slower growth and higher inflation. Growth forecasts for China and Europe were also lowered, the New York Times reported.
The I.M.F. forecasts that global output will slow to 2.8 percent this year from 3.3 percent in 2024. It also expects output to be slower next year.
“The global economic system that has operated for the past 80 years is being reset,” the I.M.F.’s chief economist said. The surge in uncertainty related to trade policy but also more broadly is a major driver of the economic outlook, he said.