The Asian Development Bank (ADB) has cut Bangladesh’s economic growth further to 4 percent for the current fiscal year 2025–26 from its previous projection of 4.7 percent amid a fuel price spike and disruption in global supply chains due to the war in the Middle East.
The ADB said the economy might pick up and grow by 4.7 percent in the next fiscal year 2026–27, according to the latest Asian Development Outlook (ADO) April 2026 released today.
This is the third time the ADB has revised down its Gross Domestic Product (GDP) growth forecast for Bangladesh.
The Manila-based lender in December forecast 4.7 percent GDP growth in the current fiscal year, down from its September forecast of 5 percent. In April last year, the ADB had projected 5.1 percent growth for the same year.
The current growth outlook reflects a recovery in consumption and investment as political uncertainty eases after the general election. Temporary supply chain disruptions linked to conflict in the Middle East affected activity in the last quarter, but their impact is expected to fade, the ADB said in a press release.
“Bangladesh is facing a difficult economic environment, shaped by global uncertainties, domestic structural constraints, and pressures on the external and financial sectors,” said ADB Country Director in Bangladesh Hoe Yun Jeong.
Inflation is projected to remain elevated at 9 percent in FY26, despite some easing, reflecting persistently high global energy prices and ongoing supply disruptions. It is expected to moderate to 8.5 percent in FY27 as external shocks subside and domestic supply conditions improve.
“Downside risks to the outlook remain substantial, particularly if the conflict prolongs,” it said.
Disruptions to global energy markets, shipping routes, and supply chains could drive sustained increases in oil and gas prices, intensifying domestic inflationary pressures and complicating ongoing disinflation efforts, thereby constraining macroeconomic policy flexibility, it said.
“Higher energy prices could also widen the fiscal deficit, especially if energy-related subsidies increase or the pass-through to consumers is delayed.”
The ADO report said external sector pressures may rise as exports and remittances soften amid slower economic activity in key Persian Gulf economies, while elevated import costs and freight rates would further strain the current account amid already tight external liquidity.
Overall, the balance of risks is firmly tilted to the downside, underscoring Bangladesh’s vulnerability to external shocks in a context of still-fragile macroeconomic conditions. Climate-related shocks remain an additional, persistent risk.
The ADB said the current account deficit, the record of a country's international transactions with the rest of the world, is anticipated to be 0.5 percent of Gross Domestic Product in FY26, widening slightly to 0.6 percent in FY27, driven by stronger import demand and a broader trade deficit.
