The slowdown in inflation is expected to be supported by improved monetary policy transmission and the easing of import restrictions, says the World Bank’s Bangladesh Development Update.
Representational image: Photo: Collected
“>
Representational image: Photo: Collected
The World Bank has projected a brighter economic outlook for Bangladesh, forecasting that both poverty and inflation will gradually ease by the next two years.
In its latest Bangladesh Development Update October 2025 report released today (7 October), the World Bank projected the national poverty rate to decline to 19.1% and inflation to ease to 7.4% in the current fiscal year (2025-26), down from an estimated 21.2% and 10%, respectively, a year earlier.
The World Bank said that after remaining elevated for three consecutive years, inflation is projected to ease further, reaching around 5.5% by FY2026-27.
“The slowdown in inflation is expected to be supported by improved monetary policy transmission and the easing of import restrictions,” says the report.
It also mentioned that a more stable exchange rate and contained international commodity prices would help reduce imported inflation.
Similarly, the national poverty rate is projected to drop again, reaching 18.1% in the next fiscal year.
Looking back, FY25 saw the national poverty rate climb to 21.2%, from 20.5% in FY24, reflecting the combined impact of slower growth, high inflation and deteriorating labour market conditions, adds the report.
Labour market conditions are projected to improve modestly in FY26, with household labour income rising by almost 3%. Inequality is expected to narrow slightly to a Gini index of 33.2.
Even though the World Bank has trimmed its growth outlook for Bangladesh, projecting the economy to expand by 4.8% in FY26 – slightly down from its June estimate of 4.9% – this would still mark the fastest growth in three years, following an estimated sluggish 4% expansion last year.
However, the World Bank warned that Bangladesh’s FY26 economic rebound, following a slow year, could be threatened by potential banking sector weaknesses and heightened political instability around the upcoming national election.
It also flagged risks from delays in reform implementation, international trade disruptions from policy uncertainty, a slower-than-expected moderation in inflation, and constraints in energy supply.