The Asian Development Bank has said that consumption will remain the primary driver of growth for Bangladesh in FY2026, spurred by robust remittance inflows and election-related spending.
However, contractionary monetary and fiscal policies, along with heightened investor caution, are expected to dampen investment, according to Asian Development Outlook (ADO) September 2025, released here today.
It said global tariff hikes, including a 20 per cent tariff on Bangladesh exports to the US, and stiffer competition in the EU is expected to weigh on exports and growth. Exporters may be compelled to reduce unit prices in response to this heightened competition.
On the supply side, services are expected to expand, driven by improved household purchasing power. Agricultural growth is likely to normalise, contingent on favorable weather and effective government policy support.
In contrast, industrial growth may slow as US tariffs constrain economic activity, said the release.
It said Bangladesh’s economy is estimated to grow by 4.0 per cent in fiscal year (FY) 2025, rising to 5.0 per cent in FY-2026.
Although garment exports remain resilient, the slower growth estimate reflects subdued domestic demand amid ongoing political transitions, recurrent flooding, industrial labor disputes, and persistently high inflation.
The economy expanded by 4.2 per cent in FY-2024.
‘Future growth will depend on improving the business environment to boost competitiveness and attract investment, and on ensuring reliable energy supplies,’ said Hoe Yun Jeong, ADB country director for Bangladesh.
‘The impact of US tariffs on Bangladesh’s trade remains to be seen, and vulnerabilities in the banking sector persist. Addressing these challenges is essential to achieving higher economic performance,’ he added.
‘Some downside risks to the FY2026 outlook persist. Trade uncertainty, banking sector weaknesses, and potential policy slippages could impede progress. Maintaining prudent macroeconomic policies and accelerating structural reforms are critical to strengthening resilience.’
The ADB Outlook said inflation is estimated to rise from 9.7 per cent in FY2024 to 10.0 per cent in FY2025, driven by limited competition in wholesale markets, inadequate market information, supply chain constraints, and the weakening of the Taka.
The current account is expected to post a small surplus of 0.03 per cent of GDP in FY2025, up from a deficit of 1.5 per cent of the GDP in FY2024, supported by a narrowing trade gap and robust remittance inflows.
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