Highlights
- Bangladesh GDP growth forecast: 3.7% in FY2026, 4.5% in FY2027.
- Inflation remains high, averaging 9.0% in FY2026.
- Weak exports, investment, energy costs slow economic growth.
- Remittances and services sector continue supporting the economy.
- Reforms needed to strengthen investment, governance, and macroeconomic stability.
- Global conflicts, oil prices, climate risks threaten economic outlook.
Bangladesh’s economy is projected to grow by 3.7% in fiscal year (FY) 2026 and 4.5% in FY2027, as persistent inflation, weak exports, subdued private investment and an increasingly challenging external environment weigh on economic activity.
According to the Asian Development Bank’s (ADB) latest Asian Development Outlook (ADO) July 2026 release today (9 July), the revised forecast reflects weaker export performance, elevated energy prices, sustained inflationary pressures and a deteriorating global outlook.
“Bangladesh’s economy continues to demonstrate resilience amid challenging global and domestic conditions, supported by robust remittance inflows and steady growth in the services sector,” said Akira Matsunaga, officer-in-charge of ADB’s Bangladesh Resident Mission.
He said sustained reforms to strengthen macroeconomic stability, improve the investment climate, enhance financial sector governance, and address energy and infrastructure constraints would be essential to support a stronger and more inclusive recovery.
“Such reforms would also help attract private investment, create quality employment and reinforce economic resilience”, he added.
ADB expects average inflation to remain elevated at 9.0% in FY2026, unchanged from its April forecast, before easing marginally to 8.8% in FY2027, higher than the previously projected 8.5%, the report says.
According to the report, recent increases in domestic prices of petroleum, gas and electricity are expected to continue feeding into transportation, utility and other consumer costs.
It adds that inflationary pressures are also likely to persist due to exchange rate pass-through effects and sustained increases in food and services prices.
The report said economic growth in FY2026 would be supported by strong remittance inflows, stable services sector activity and targeted credit easing measures for priority sectors despite an otherwise tight macro-financial environment.
“High inflation is expected to continue eroding household purchasing power and limiting private consumption. Weak export performance and moderate import growth also indicate subdued external demand and restrained private investment. On the supply side, export-oriented manufacturing is expected to remain under pressure from elevated energy costs, sluggish global demand and structural bottlenecks, while the agricultural sector faces risks stemming from fertiliser shortages. The services sector is likely to provide some support to overall growth, aided by remittance-driven household income,” the report cites.
Looking ahead to FY2027, the ADB report said moderating inflation, simplified business regulations, improved governance, tax administration reforms, and continued remittance incentives are expected to support stronger consumption and investment.
“Nevertheless, vulnerabilities in the banking sector, persistent energy shortages, and weak competitiveness are expected to keep the pace of economic expansion gradual.”
The report warned that downside risks remain significant. “An escalation of conflict in the Middle East could push up energy and shipping costs, intensify external pressures, fuel inflation and weaken remittance inflows.”
It also noted that higher global oil prices could increase Bangladesh’s import bill and place additional pressure on public finances through higher energy subsidies.
“Rising tariffs, expanding trade restrictions, or slower growth in major economies could further dampen export demand and prolong weakness in the manufacturing sector.”
The report added, “Persistent exchange rate pressures, tighter global financing conditions and climate-related shocks were also identified as key risks to the country’s economic outlook.”
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