Bangladesh’s economy rebounded in the second half of FY25 after disruptions earlier in the year, driven by strong exports, record remittances, and a rise in foreign exchange reserves, according to the World Bank’s latest Bangladesh Development Update released today.
The report projects GDP growth to increase from 4% in FY25 to 4.8% in FY26 and 6.3% in FY27, supported by stabilised external conditions and improved policy measures.
External pressures eased during FY25 as a market-based exchange rate was introduced, foreign reserves stabilised, and exports rose strongly. Inflation moderated due to tighter monetary policy, lower food import duties, and strong harvests. However, the fiscal deficit widened amid weak tax revenue and higher subsidies and interest payments.
The report notes that poverty rose between 2023 and 2024, with labour force participation falling from 60.9% to 58.9%, disproportionately affecting women. Of the three million additional working-age people outside the labour force, 2.4 million were women.
“The economy has shown resilience, but this cannot be taken for granted,” said Jean Pesme, World Bank division director for Bangladesh and Bhutan. “To ensure a strong growth path and more and better jobs, Bangladesh needs bold reforms and faster implementation to boost revenue mobilisation, address banking sector weaknesses, reduce energy subsidies, plan urbanisation, and improve the investment climate.”
The update calls for rethinking spatial development strategies to reduce regional disparities, noting that industrial jobs remain concentrated in Dhaka and Chattogram.
The Bangladesh Development Update accompanies the South Asia Development Update titled Jobs, AI, and Trade, which forecasts South Asia’s growth at 6.6% in 2025 but warns of a looming slowdown. It highlights trade reforms and AI adoption as key to boosting productivity and job creation.
“South Asia remains the fastest-growing region globally, but countries must proactively address risks to sustain this momentum,” said Johannes Zutt, World Bank vice-president for South Asia.
The report emphasises that greater trade openness and adoption of AI could help channel investment, productivity, and employment growth across the region.