The Asian Development Bank (ADB) has lowered Bangladesh’s economic growth forecast for the current fiscal year, citing weak exports, sluggish private investment, persistently high inflation and an increasingly challenging global environment.
In its Asian Development Outlook (ADO) July 2026 released on Thursday, the Manila-based lender projected Bangladesh’s gross domestic product (GDP) growth at 3.7 percent in FY2026, with a modest recovery to 4.5 percent in FY2027.
The revised projection marks a weaker outlook than earlier estimates as the economy continues to grapple with elevated energy costs, subdued external demand and structural constraints affecting investment and manufacturing.
ADB also warned that inflation is likely to remain stubbornly high. Consumer inflation is forecast at 9.0 percent in FY2026, unchanged from its April projection, before easing only slightly to 8.8 percent in FY2027, higher than the 8.5 percent forecast made three months ago.
The development bank attributed the persistent inflationary pressure to recent increases in domestic fuel, gas and electricity prices, which are expected to feed through to transport, utility and other consumer costs.
It also pointed to exchange-rate pass-through and continued food and services inflation as factors slowing the pace of price moderation.
“Bangladesh’s economy continues to show resilience amid a difficult global and domestic environment, supported by strong remittance inflows and steady services activity,” said Akira Matsunaga, Officer-in-Charge of ADB’s Bangladesh Resident Mission.
He said sustained reforms to strengthen macroeconomic stability, improve the investment climate, enhance financial sector governance and address energy and infrastructure constraints would be critical to supporting a stronger and more inclusive recovery.
According to the report, robust remittance inflows, steady expansion of the services sector and targeted credit easing for priority sectors are helping support economic activity despite a generally tight macro-financial environment.
However, high inflation continues to erode household purchasing power and restrain private consumption, while weak export performance and moderate import growth reflect soft external demand and subdued private investment.
On the supply side, export-oriented manufacturing is expected to remain under pressure from high energy prices, weak overseas demand and structural bottlenecks. Agriculture also faces risks from fertiliser shortages, the report said.
ADB expects gradual improvement in FY2027 as inflation moderates, business regulations are simplified, governance and tax administration improve, and remittance incentives continue to support household income and investment.
However, the lender cautioned that banking sector vulnerabilities, energy shortages and weak competitiveness would likely limit the pace of recovery.
The report highlighted several downside risks, including a possible escalation of the Middle East conflict that could drive up energy and shipping costs, weaken remittance inflows and intensify inflationary pressures.
Higher global oil prices, additional trade restrictions, weaker growth in major export markets, continued exchange-rate pressures, tight external financing conditions and climate-related shocks could further undermine Bangladesh’s economic outlook, ADB said.