Bangladesh's economic growth slows but inflation reined in

FE REPORT | Published: December 11, 2025 00:17:01

Bangladesh's economic growth may decelerate to 4.7 per cent in the current fiscal year but inflation gets bridled with tighter monetary-policy actions, shows a mixed picture portrayed by the Asian Development Bank.
The development financier, however, paints a better scenario of South Asia in its December version of Asian Development Outlook (ADO) on the back of advances of several economies, including India's.
In the September 2025 ADO, the Manila-based financier had forecast Bangladesh's gross domestic product (GDP) growth a bit higher at 5.0 per cent for the fiscal year 2025-26.
The latest growth outlook is also much lower than its April 2025 ADO, wherein the ADB had projected a 5.1-percent GDP growth, 0.40-percentage-point higher than the latest-projected 4.7 per cent.
Bangladesh's prospective economic growth is slashed for the FY2026 amid weak exports and upcoming election uncertainty, the Asian Bank says in its December 2025 outlook unveiled Wednesday from its headquarters.
Meanwhile, the development financier has projected 6.0-percent economic growth for South Asia as Indian and other economies would perform better than Bangladesh's.
The regional growth forecast in the September 2025 ADO was at the same rate of 6.0 per cent.
Despite a gloomy economic outlook, Bangladesh's inflationary pressure in the current FY will be the same at 8.0 per cent, according to the ADB assessment.
Such weak GDP-growth projection is attributed to several significant headwinds, including weaker-than-expected export performance and heightened uncertainty regarding investment, which stems from the anticipated effects of policy related to the upcoming national elections scheduled for February.
The reduced forecast also reflects "weaknesses in the financial sector", says the ADB.
It notes that exports, a key component of the economy, have faced considerable pressure.
"They have been weighed down both by subdued global demand and by internal supply disruptions. A major factor was a strike in October at Chittagong Port, which severely hampered trade flows, as this facility handles more than 90 per cent of Bangladesh's imports and exports."
Despite the downgrade in the FY2026 growth projection, the ADB forecasts that Bangladesh's inflation will be remain unchanged at 8.0 per cent.
This stability is predicated on the assumption that the government will maintain tighter monetary and fiscal policies.
Furthermore, continuous efforts to mitigate exchange-rate volatility and the beneficial impact of declining global commodity prices are expected to keep the inflation outlook steady.
It is notes that while the forecast for FY2026 has been lowered, the country's growth outlook for this fiscal year remains unchanged from previous projections of 4.0 per cent.
Meanwhile, the economic outlook for South Asia has improved for 2025, largely driven by stronger-than-anticipated growth in India, although the regional forecast is tempered by a downward revision for Bangladesh.
Growth in South Asia is expected to remain robust, with the FY2025 forecast revised upward to 6.5 per cent from 5.9 per cent, and the FY2026 forecast maintained at 6.0 per cent, the ADB states in the report.
This is driven by upgrades to India's outlook based on robust growth in domestic consumption.
Sri Lanka's forecast is revised upward for FY2025 and FY2026 due to robust credit expansion, buoyant consumption, and improved investor confidence following rating upgrades.
In contrast, Bangladesh's FY2026 projection is lowered due to weaker exports amid subdued global demand and supply disruptions, while the forecast for FY2025 remained unchanged.
Pakistan's FY2025 growth outlook is upgraded following a stronger than-expected Q4 growth. Forecasts for the remaining South Asian economies are retained, although Nepal faces lingering uncertainty in the aftermath of civil unrest in September and the ongoing political transition.