The World Bank has revised Bangladesh's growth prospect into down trajectory as it forecast the Gross Domestic Product (GDP) growth at 4.6 per cent in the upcoming fiscal year (FY) 2026-27.
It has also downgraded Bangladesh's GDP growth projection for the outgoing FY2026 by 0.8 percentage point to 3.8 per cent from its 4.6 per cent forecasted in January 2026 report, the Global Economic Prospect (GEP) report, unveiled by the World Bank on Friday.
Bangladesh's economic growth for the next fiscal is likely to be lowered by 1.50 percentage point to 4.6 per cent from that of 6.10 per cent, the global lender forecasted in its January GEP report.
The growth forecast by the global lender for the next fiscal has been cut to only 4.6 per cent when Bangladesh government has taken a target to achieve 6.5 per cent GDP growth in the next fiscal.
The global lender in its latest GEP report said the conflict in the Middle East is expected to slow global growth to the lowest rate since the onset of the COVID-19 pandemic amid higher energy prices, steeper inflation, and increased borrowing costs.
The global growth is forecast to slow to 2.5 per cent in 2026, down from 2.9 per cent in 2025, the WB GEP report added saying forecasts for two-thirds of economies have been downgraded relative to January this year.
Global growth is expected to improve to 2.8 per cent in 2027 but will remain 0.4 percentage point below the average during the 2010s.
The World Bank said: "The disruptions to commodity markets and international trade resulting from the conflict in the Middle East have led to shortages of energy and agricultural products and put upward pressure on energy and food prices in South Asian Countries (SAR)."
Although the inflation has still generally remained within or below central banks' target ranges, but in Bangladesh the inflation has stayed elevated, alongside tight monetary policy.
"In Bangladesh and Nepal, domestic political uncertainties have waned, but private activity has been constrained by increased input costs and weaker investor sentiment. In these economies, the financial sector remains fragile, with subdued credit growth and deteriorating asset quality," the GEP report stated.
"Fiscal balances in the region are set to deteriorate in 2026. In several economies, including Bangladesh, Bhutan, India, and Maldives, fiscal deficits are anticipated to rise, partly owing to increases in subsidies intended to counteract the surges in energy prices," the WB report projected.
The World Bank said the weak growth in developing economies has stalled progress toward advanced-economy income levels. By 2028, developing economies other than China and India will have collectively experienced nearly a decade of no progress on narrowing their per capita income gap with advanced economies, the report finds.
"Developing countries have faced a series of challenges over the last decade," said Ajay Banga, President of the World Bank Group.
According to the report, the closure of the Strait of Hormuz has severely disrupted energy markets, with Brent crude oil prices projected to average $94 a barrel in 2026, 36 per cent above 2025 levels, assuming the worst disruptions abate in July.
Fertiliser prices are forecast to increase significantly this year, with knock-on effects for food prices. Together, these pressures are pushing up global inflation, which is expected to rise to 4.0 per cent this year, up substantially from 3.3 per cent in 2025, the GEP report said.
About the global economy, the WB said if energy supply disruptions prove more severe than currently assumed and are accompanied by substantial financial stress, global growth could fall to just 1.3 per cent in 2026, and inflation would rise to 4.4 per cent.
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