The government expects the country’s economy to cross the $500 billion mark in the fiscal year (FY) 2026-27, buoyed by stabilising policies and sectoral improvements.
These projections were made by the Finance Division in its Medium-term Macroeconomic Policy Statement, released on June 2 alongside the national budget proposal for FY26.
For all latest news, follow The Daily Star’s Google News channel. The statement includes forecasts for gross national income (GNI), foreign exchange reserves, exports, imports and inflation through to FY28.
These projections were made using forecasting models developed by the International Monetary Fund (IMF) and the World Bank, adjusted with historical data.
Gross domestic product (GDP) measures the total market value of all goods and services produced within a country in one year, according to Investopedia.
GNI, by contrast, includes income earned by residents and businesses both at home and abroad.
According to the Finance Division, the nominal GDP of Bangladesh will reach $514 billion in FY27, up from a provisional estimate of $463 billion in FY25. In FY26, it is projected to stand at $487 billion.
GNI is expected to overtake the GDP earlier, with the government forecasting it to hit $512 billion in FY26, up from $486 billion in FY25.
However, some economists have questioned the reliability of the data used to make these predictions.
“The Bangladesh Bureau of Statistics is still relying on previous figures. It should carry out fresh surveys to reveal the real state of the economy,” said Professor Mustafizur Rahman, a distinguished fellow at the local think tank Centre for Policy Dialogue (CPD).
He said that based on previous figures and accounts, GDP might exceed the half-trillion mark in FY27 if the government meets its growth targets of 4 percent in FY26 and 5.5 percent in FY27.
As for GNI, the economist added, “It is always higher than GDP in Bangladesh because our nationals earn more abroad than foreign nationals earn here.”
The upbeat outlook by the government comes at a time when several international development partners, including the World Bank, IMF and Asian Development Bank, have offered more cautious estimates.
Citing political uncertainty, weak investment and geo-political tensions, they expect real GDP to grow between 3 and 4 percent in FY25.
In its provisional estimate for FY25, state-owned statistical agency BBS also projected GDP growth at 3.97 percent
Despite the current slowdown, the Finance Division expects a gradual recovery. It projects real GDP growth to reach between 5.5 and 6.5 percent by FY28, supported by efforts to bring down inflation, boost productivity and strengthen the external sector.
“The government’s efforts to control inflation, enhance productivity, and maintain external resilience will be critical for ensuring macroeconomic stability,” said the policy statement.
Following the Covid-19 pandemic, Bangladesh struggled to keep its exchange rate stable as foreign currency reserves depleted fast.
For FY25, the Finance Division revised the estimate for foreign exchange reserves to $26.7 billion, down from $31.8 billion in the original projection.
In FY24, actual forex reserves were at $26.9 billion.
The government expects reserves to rise to $34 billion in FY26, with a slight increase the following year.
Professor Rahman said the target could be met, but only under certain conditions.
“Gross reserves might cross $34 billion, but that depends on assumptions that import growth stays low at around 6 percent and export growth remains strong,” he said.
But sluggish import growth could spell trouble, he said.
“If import growth stays this low, it does not bode well for GDP growth, investment or job creation. This trend is mainly due to falling imports of capital machinery.
“What we need is higher imports of capital machinery, not just a push to increase foreign currency reserves,” he added.
The central bank currently uses two methods to measure foreign currency reserves. According to Bangladesh Bank data, gross reserves stood at $25.8 billion on May 29, while the BPM6 method by the IMF recorded it at $20.6 billion.
“We need to maintain reserves at a sustainable level,” said Rahman. “But we must also remember that reserves will be used if investment rises and capital machinery imports go up.”
“I would prefer strong investment, higher growth, stable reserves and a steady exchange rate rather than low investment, weak growth and artificially high reserves,” he added.