The Asian Development Bank has lowered its growth projection for Bangladesh economy to 3.9 percent for 2024-25 fiscal year, citing weaker domestic demand and high inflation.
Earlier, the Manila-based lender had projected a 4.3 percent growth for FY25. Bangladesh economy grew at a rate of 4.2 percent in FY24.
In its flagship publication –Asian Development Outlook (ADO) April 2025 unveiled on Wednesday, ADB also predicted that the growth will rebound to 5.1 percent in FY26.
Despite rowth in Bangladesh’s RMG expots, the slower growth forecast for FY25 reflects weaker demand amid political transition, risks of natural disasters, industrial unrest and high inflation, it said.
Inflation is forecast to accelerate 9.7 percent in FY24 to 10.2 percent in FY25 due to stifled competition in wholesale markets, inadequate market information, supply chain constraints, and the depreciation of taka.
ADB says the latest growth forecast did not take into account the impacts of US tariffs imposed on Bangladeshi exports to the US market as the report was prepared before April 02.
“With the imposition of tariffs by the US, Bangladesh’s RMG exports to US market will definitely have some negative impacts. But it is too early to make an assessment as other competing countries are also facing similar problem,” said ADB Country Director for Bangladesh Hoe Yun Jeong at a press briefing.
Alongside initiating negotiation with the US authorities, Bangladesh must diversify both its goods and export destinations in the near and long terms to face the headwinds, he also suggested.
“Despite external and domestic headwinds, Bangladesh’s economy remains resilient, which can be fortified by implementing crucial structural reforms,” he said.
About positive sides of the economy, ADB noted narrowing current account deficit, higher remittance inflow as well as revenue collection.
The current account deficit is anticipated to shrink from 1.4 percent in FY24 to 0.9 percent in FY25 as the trade deficit narrows and remittance rise.
The ADP April 2025 projects that consumption and investment will grow moderately, driven by strong remittance inflows but partly offset by contractionary monetary and fiscal policies and investor caution.
Global tariff increases are also expected to affect Bangladesh’s exports and economic growth over the course of time, according to ADB’s latest report, the Asian Development Outlook (ADO) April 2025, released today.
On the supply side, it said services growth is expected to be slower due to political uncertainty, financial sector vulnerability, and reduced household purchasing power.
Agricultural growth is likely to moderate following repeated floods, while industry growth is expected to improve marginally with a rebound in manufacturing aided by export growth, added the report.
ADB’s Country Economist Chandan Sapkota said that reforms in investment policy and business-friendly environment is critical to attract investment, boost competitiveness, and ensure smooth and sustainable LDC graduation.
Chandan emphasised streamlining reforms needed to attract FDI and boost private investment, simplifying licensing and business procedures; improving inter-agency and policy coordination, leverage BICIP to cut red tapes and improve regulatory transparency.
He also suggested joining WTO’s Investment Facilitation for Development to guide reforms as well as empowering BIDA to lead on policy coherence and signal investment readiness.