The 12-month average inflation in the country is expected to rise further to 10.2 per cent in FY25, before easing to 8 per cent in the next fiscal, it noted in its Asian Development Outlook (ADO) April 2025.
The Asian Development Bank expects Bangladesh’s economy to grow by just 3.9 per cent in this fiscal, before rising to 5.1 per cent in FY26.
The 12-month average inflation in the country is expected to rise further to 10.2 per cent in FY25, before easing to 8 per cent in the next fiscal, it noted.
Enduring inflation is a significant hurdle due to market inefficiency, an ABD report observed.
The FY26 rebound is expected to be driven by rising domestic demand, easing inflation, and stronger remittance inflows, which would boost both private consumption and investment.
Despite growth in Bangladesh’s exports in the garments sector, the slower growth forecast reflects weaker domestic demand amid political transition, risks of natural disasters, industrial unrest and high inflation, it noted.
The country’s economic growth was 4.2 per cent in FY24.
Bangladesh now faces macroeconomic challenges like a slowing economy, persistent high inflation, limited domestic revenue mobilisation, low foreign direct investment, increasing non-performing loans in banks and insufficient foreign exchange reserves, ADB country director for Bangladesh Hoe Yun Jeong told a recent press conference.
“Nevertheless, it is reassuring to note that the Interim Government has made macroeconomic stability a focus, alongside institutional, social, and political reforms,” he noted.
“Despite external and domestic headwinds, Bangladesh’s economy remains resilient, which can be fortified by implementing crucial structural reforms,” he added.
Agricultural growth is likely to moderate following repeated floods, while industry growth is expected to improve marginally with a rebound in manufacturing aided by export growth.
Higher election-related spending could raise inflation and the fiscal deficit. Persistently high inflation or prolonged monetary tightening may dampen household consumption and private investment, weakening growth momentum, the ADB report said.
Enduring inflation is a significant hurdle due to market inefficiency brought on by regulatory shortcomings, restrained competition in wholesale markets, insufficient market information, supply chain constraints and depreciation of taka, the report observed.
Fibre2Fashion News Desk (DS)