Bangladesh’s economic growth is expected to rise to 4 percent in FY2027 from 3.7 percent in FY2026, but high inflation, energy shortages, costly credit and financial-sector weaknesses could limit the recovery, the Asian Development Bank said yesterday.
The ADB, in its Asian Development Outlook (ADO) September 2026, said the economy grew 3.5 percent in FY2025 and slowed further in the final quarter of FY2026 amid supply-chain disruptions caused by the conflict in the Middle East.
The recovery in FY2027 is expected to be driven mainly by stronger private consumption and investment as political uncertainty eases following the general election earlier this year.
“Bangladesh’s economy is beginning to recover, but the recovery remains vulnerable to external shocks and domestic constraints,” said ADB Country Director Qingfeng Zhang.
He called for faster reforms in macroeconomic management, the financial sector, energy security and the business environment to revive private investment and create quality jobs.
The ADB, however, expects inflation to rise to 9 percent in FY2027, from an estimated 8.7 percent in FY2026. Inflation was 10 percent in FY2025.
Energy shortages, high production and transport costs, possible shipping disruptions, delayed effects of El Niño on food prices and gradually easing monetary conditions are expected to keep inflation elevated.
High inflation will continue to squeeze household purchasing power, although private consumption is expected to remain the main growth driver, supported by remittance inflows.
The services and agriculture sectors are expected to support growth, while industry and investment will remain constrained by high borrowing costs, limited access to credit, energy shortages and weak external demand.
The current account deficit is projected to widen to 0.6 percent of GDP in FY2027, from 0.3 percent in FY2026, as imports are expected to grow faster than exports.
Remittances are expected to remain resilient despite tensions in the Middle East. Higher foreign exchange reserves and strong remittance inflows will support external stability, although the ADB stressed the need for adequate financial inflows, exchange-rate flexibility and prudent macroeconomic management.
The growth outlook also faces risks from a prolonged Middle East conflict, higher oil prices, further shipping disruptions, tighter trade restrictions and weaker growth in major export markets.
Continued exchange-rate pressures, additional stress in the banking sector, delays in fiscal reforms, lower-than-expected development spending and climate-related shocks could further weaken growth and keep inflation high, the ADB warned.