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Bangladesh’s economy is expected to recover gradually over the next two fiscal years, with growth projected to rise to 4.0% in FY2026 and 4.7% in FY2027, up from 3.5% in FY2025, according to the Asian Development Bank’s (ADB) Asian Development Outlook (ADO) April 2026 released on Wednesday.
The improved outlook reflects a rebound in domestic consumption and investment as political uncertainty eases following the general election.
Although economic activity slowed in the final quarter due to temporary supply chain disruptions linked to the Middle East conflict, the impact is expected to diminish in the coming months.
“Bangladesh is facing a challenging economic environment shaped by global uncertainties, domestic structural constraints, and pressures on the external and financial sectors,” said ADB Country Director Hoe Yun Jeong.
He noted that the new government’s reform agenda presents a timely opportunity to strengthen macroeconomic stability, rebuild private sector confidence, and support economic recovery.
Inflation is projected to remain high at around 9% in FY2026, driven by elevated global energy prices and lingering supply disruptions. However, it is expected to ease slightly to 8.5% in FY2027 as external pressures subside and domestic supply conditions improve.
The current account balance is forecast to post a modest deficit of 0.5% of GDP in FY2026, widening slightly to 0.6% in FY2027 due to stronger import demand and a broader trade gap.
Despite geopolitical tensions in the Middle East, remittance inflows are expected to remain resilient in the near term.
ADB expects moderate growth in both consumption and investment, supported by steady remittance inflows, election-related public spending, and ongoing government efforts to improve the business environment and attract investment.
On the supply side, the services sector is likely to rebound, aided by improved household purchasing power, expanded social protection programmes, and financial sector reforms. Agricultural output is expected to stabilise, assuming favourable weather and continued policy support. Industrial growth is also projected to strengthen, backed by export recovery, easing supply constraints, and increased focus on infrastructure and energy security.
However, downside risks remain significant. A prolonged conflict in the Middle East could disrupt global energy markets, shipping routes, and supply chains, leading to sustained increases in oil and gas prices.
This, in turn, could intensify inflationary pressures, widen the fiscal deficit, and strain external balances.
ADB also warned that slower economic activity in key Gulf economies could affect both exports and remittance inflows, while higher import costs and freight rates may further pressure the current account amid already tight external liquidity conditions.
Overall, the balance of risks remains tilted to the downside, highlighting Bangladesh’s vulnerability to external shocks. Climate-related risks also continue to pose a long-term challenge to economic stability.
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