Bangladesh’s economy is expected to gradually recover 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 Asian Development Bank’s latest forecast.
The improved outlook is driven by a rebound in consumption and investment as political uncertainty eases following the general election, says Asian Development Outlook (ADO) April 2026 released on Friday.
While economic activity was disrupted in the final quarter due to supply chain shocks linked to the Middle East conflict, those effects are expected to fade in the coming months.
“Bangladesh is facing a difficult economic environment, shaped by global uncertainties, domestic structural constraints, and pressures on the external and financial sectors,” said Hoe Yun Jeong, Country Director of ADB.
“The new government’s reform agenda offers a timely opportunity to strengthen macroeconomic stability, restore private sector confidence, and support recovery,” he added, noting that sustained reforms could help the country return to a more inclusive growth path.
Inflation, however, is projected to remain high at 9.0% in FY2026 before easing slightly to 8.5% in FY2027.
The elevated price levels reflect continued global energy cost pressures and lingering supply disruptions, although some moderation is expected as external shocks subside and domestic supply improves.
On the external front, the current account deficit is forecast to remain modest at 0.5% of GDP in FY2026, widening slightly to 0.6% in FY2027 due to stronger import demand and a widening trade gap. Remittance inflows are expected to stay resilient despite ongoing tensions in the Middle East.
The ADB report highlights moderate growth in consumption and investment, supported by steady remittances and election-related public spending.
Government efforts to improve the business climate and attract investment are also expected to contribute to the recovery.
Sector-wise, the services sector is projected to rebound on the back of improved household purchasing power, expanded social protection, and financial sector reforms.
Agricultural output is expected to stabilise with favourable weather and continued policy support, while industrial growth is likely to strengthen, driven by exports, easing supply constraints, and ongoing infrastructure and energy initiatives.
Despite the positive outlook, the ADB warned of significant downside risks. A prolonged Middle East conflict could disrupt global energy markets, shipping routes, and supply chains, pushing up oil and gas prices and intensifying domestic inflationary pressures.
This could also strain fiscal balances, particularly if energy subsidies rise or price adjustments are delayed.
External sector risks may also increase if export earnings and remittances weaken amid slower growth in key Gulf economies. Higher import costs and freight charges could further pressure the current account at a time of already tight external liquidity.
“The balance of risks remains tilted to the downside,” the report noted, highlighting Bangladesh’s vulnerability to external shocks amid still-fragile macroeconomic conditions. Climate-related risks were also identified as a persistent concern.
The Asian Development Bank, founded in 1966 and owned by 69 members, continues to support sustainable and inclusive development across Asia and the Pacific through financing, partnerships, and policy support.