The World Bank (WB) has cut its forecast for Bangladesh’s economic growth from its June prediction by 0.3 percentage points for the current fiscal year (FY) 2025-26 amid persistent inflation, falling exports and sluggish investment.
In its Global Economic Prospects report released yesterday, the multilateral lender projected the economy will expand by 4.6 percent in the year ending June 2026.
The revision follows the Bangladesh Bureau of Statistics (BBS) report showing gross domestic product (GDP) grew 4.5 percent in the first quarter of FY26, up from 2.58 percent in the same quarter last year, driven by industrial and agricultural activity.
Economists described the growth as a sign of recovery but stressed the challenge lies in sustaining it.
Last month, the Asian Development Bank (ADB) also downgraded its forecast, citing weak investment ahead of the general election and slower export growth, projecting GDP growth at 4.7 percent, down from 5 percent in September.
The WB report noted subdued credit demand and slower business activity, but expected the economy to pick up to 6.1 percent in FY27 as private consumption strengthens and inflationary pressures ease.
Reduced political uncertainty after next month’s election and the anticipated implementation of structural reforms by a new government are projected to boost industrial activity, public spending, and investment, it also said.
The report said inflationary pressures are anticipated to soften in Bangladesh, leading to monetary policy easing.
“In Bangladesh, the exchange rate has stabilised since mid-2025, partly reflecting the adoption of a more flexible currency regime in May,” the WB also said.
The report highlighted some risks. Further trade restrictions or heightened global policy uncertainty could dampen exports and economic activity.
The WB report said although openness to global trade is relatively limited in the region’s economies, the risk is higher in those with larger exposure to the United States, including Bangladesh and Sri Lanka, than in other regional economies.
Bangladesh’s exports fell 2.19 percent year on year in July–December FY26, according to the Export Promotion Bureau.
The WB, meanwhile, also slashed GDP growth projections for Maldives, Bhutan and Nepal for the year 2026 from its forecast made in June last year. It maintained growth projections for India for the year unchanged and revised upwards the forecast for Sri Lanka.
In South Asia, growth is expected to moderate to 6.2 percent in 2026 before rising to 6.5 percent in 2027, with economies excluding India projected to grow 5 percent next year and 5.6 percent in 2027, aided in part by a recovery in Bangladesh.
“However, the pace of job creation in the region will likely remain subdued,” it noted.
“Risks to the outlook are tilted to the downside and include further increases in trade restrictions and global trade policy uncertainty, a tightening of financial conditions amid banking sector vulnerabilities, increased social unrest, and extreme weather events,” it added.
Upside potential includes progress in bilateral trade talks, faster technology-led investment, particularly in India, and more stable political environments.