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The Asian Development Bank (ADB) forecasts Bangladesh’s GDP will grow by 3.9% in FY2025, with a recovery to 5.1% in FY2026, despite challenges including political transitions, natural disaster risks, and high inflation.
The ADB urges diversification and structural reforms to boost long-term economic resilience, according to the Asian Development Bank’s (ADB) latest report, the Asian Development Outlook (ADO) April 2025, released today.
Despite growth in Bangladesh’s exports in the garments sector, the slower growth forecast reflects weaker domestic demand amid political transition, risks of natural disasters, industrial unrest, and high inflation. Bangladesh’s economic growth was 4.2% in FY2024.
“Despite external and domestic headwinds, Bangladesh’s economy remains resilient, which can be fortified by implementing crucial structural reforms,” said ADB Country Director for Bangladesh Hoe Yun Jeong
“Bangladesh should diversify its economy beyond the readymade garments sector by fostering private sector development. Enhancing resilient infrastructure, improving energy security, strengthening financial sector governance, and attracting foreign investment are crucial to accelerating growth, creating jobs, and boosting competitiveness.”
Inflation is forecast to accelerate from 9.7% in FY2024 to 10.2% in FY2025 due to stifled competition in wholesale markets, inadequate market information, supply chain constraints, and the depreciation of the taka. The current account deficit is anticipated to shrink from 1.4% of GDP in FY2024 to 0.9% of GDP in FY2025 as the trade deficit narrows and remittances rise.
The ADO 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. On the supply side, 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.
The growth forecasts were finalized prior to the 2 April announcement of new tariffs by the US administration, so the baseline projections only reflect tariffs that were in place previously. However, ADO April 2025 does feature an analysis of how higher tariffs may affect growth in Asia and the Pacific.
