Bangladesh economy struggles but to recover in next fiscal: ADB
Bangladesh’s economy is set to grow by just 3.9% in the 2024–25 fiscal year, according to the latest Asian Development Outlook (ADO) released by the Asian Development Bank (ADB) on April 9. This is a significant downward revision from ADB’s earlier projection of 5.1% in September 2024 and a steep decline from the 6.6% growth forecast made in April 2024.
The report also warns of continued inflationary pressure, with the average inflation rate for FY25 expected to rise to 10.2%. This follows an already high inflation rate of 9.7% in FY24 and 9.0% in FY23. Contributing factors include supply-side disruptions, depreciation of the local currency, and increased import costs.
According to the ADB, persistent inflation is being fueled by structural inefficiencies in the market—such as limited competition in wholesale trade, inadequate market data, regulatory gaps, and ongoing supply chain issues—compounded by the weakening of the taka.
Despite the current economic headwinds, the ADB expects Bangladesh to rebound in FY26. GDP growth is forecast to rise to 5.1%, while inflation is anticipated to moderate to 8%. This recovery is likely to be supported by stronger domestic demand, improved remittance inflows, and more stable prices, all of which could drive both private consumption and investment.
The ADO report also notes that imports are projected to increase as the central bank relaxes restrictions on letters of credit, while exports may benefit from an expected economic recovery in the European Union, one of Bangladesh’s key trading partners. As a result, net exports are expected to make a modest contribution to growth.
On the production side, a resurgence in the industrial and service sectors is expected to support the overall economic recovery. However, the report cautions that recently imposed reciprocal tariffs by the United States and potential slowdowns in major export markets could still pose risks to Bangladesh’s growth outlook.
The ADB’s assessment aligns with other recent forecasts. In January, the World Bank projected a 4.1% growth rate for FY25, while the IMF in October last year reduced its estimate to 4.5%. In response to the ongoing economic challenges, Bangladesh’s government also revised its own growth forecast in December, lowering it to 5.25% from an earlier target of 6.75%.
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