Bangladesh targets 6.5% GDP growth in Budget 2026-27

At a time when Bangladesh’s macroeconomy is under considerable strain due to inflation, external debt stress and a widening revenue gap, Finance Minister Amir Khosru Mahmud Chowdhury has set a GDP growth target one percentage point higher than the target in the outgoing fiscal year.

It is also 2.36 percentage points higher than the latest provisional growth figures.

In the proposed Tk 9.38 trillion budget for fiscal year 2026-27, unveiled on Thursday, the government set a growth target for the economy at 6.5 percent.

The interim government had targeted 5.5 percent GDP growth in the budget for FY2025-26.

The proposed budget estimates the size of the economy at Tk 68.30 trillion, up from Tk 60.80 trillion in the revised budget for the outgoing fiscal year.

However, provisional estimates released by the Bangladesh Bureau of Statistics (BBS) on Wednesday put GDP at Tk 61.20 trillion for FY2025-26.

According to the BBS provisional figures, Bangladesh’s economy grew by 4.14 percent in the fiscal year ending Jun 30, 2026.

In other words, the country’s economy expanded by 4.14 percent compared with the previous fiscal year.

The final estimate for FY2024-25 showed GDP growth of 3.49 percent. The Awami League government was in power during that fiscal year, and then-finance minister Abul Hassan Mahmood Ali had set a growth target of 6.75 percent.

The Awami League government was ousted in August following a student-led mass uprising. The movement and ensuing violence, which lasted for nearly two months, dealt a major blow to the economy.

After taking office, the interim government led by Muhammad Yunus revised the growth target down to 5.25 percent in December last year. Even then, actual growth fell 1.11 percentage points short of that target.

During the Awami League era, GDP growth targets were often ambitious. Many economists, as well as members of the current administration, have alleged that economic statistics were manipulated during that period and growth figures were hyperbolic.

However, Salehuddin Ahmed, finance advisor to the Yunus administration and a former governor of Bangladesh Bank during the BNP and caretaker government period between 2005 and 2009, had pledged to move away from that practice.

While many economists view GDP growth as a measure of economic dynamism, others argue that it is not necessarily a reliable indicator of sustainable development. Nevertheless, growth figures have remained a recurring subject of political debate in Bangladesh.

The country experienced a historic GDP growth rate of 8.15 percent in FY2018-19.

Then came the COVID-19 pandemic. Before the onset of the crisis, the Awami League government had set a growth target of 8.2 percent for FY2019-20. Actual growth, however, came in at 3.45 percent—the lowest in three decades.

According to the Bangladesh Economic Review, the last time growth was lower was in FY1990-91, when it stood at 3.24 percent.

After weathering the pandemic, GDP growth rebounded to 6.94 percent in FY2020-21 and rose further to 7.10 percent in FY2021-22.

For FY2022-23, then finance minister AHM Mustafa Kamal initially targeted 7.5 percent growth. The target was later revised down to 6.5 percent, but even that proved unattainable. BBS data showed the economy expanded by 5.78 percent that year.

Investment had begun recovering after the pandemic when the Russia-Ukraine war triggered fresh uncertainty across the global economy.

Countries around the world felt the impact. The international prices of food and other commodities surged, while the US dollar strengthened sharply. Rising import costs pushed up production expenses and piled on pressure on economies worldwide.

As a result, Bangladesh’s GDP growth slowed to 4.22 percent in FY2023-24.

Even then, the Awami League government targeted 6.75 percent growth in the FY2024-25 budget. Actual growth ended up at 3.49 percent.

International organisations had already forecast a further slowdown that year.

The World Bank projected GDP growth of 3.9 percent for Bangladesh in FY2025-26, while the International Monetary Fund (IMF) forecast 4.7 percent. The Asian Development Bank (ADB) projected growth at 4.0 percent.

The Iran war has also affected Bangladesh and other Asian economies, exacerbating energy shortages and increasing uncertainty. Citing these challenges, institutions such as the World Bank and ADB had warned that economic growth could weaken further.

In his budget speech, Amir Khosru said: “A strong and prosperous economy is built on the creativity, labour, skills, and productive capacity of every citizen of the country. The government has therefore embarked on an inclusive economic transformation path.

“As a result, the benefits of development are expected to reach people from all walks of life.

“Keeping this goal in mind, we have formulated a medium-term strategic framework to achieve stability, restructuring and steer the economy towards investment-led growth.”

He said, “Under this framework, by the fiscal year 2030-31, we aim to raise the country’s real GDP growth rate to 8.5 percent, bring inflation down to 5 percent, increase foreign direct investment to 2.7 percent of GDP, and lift total investment to 40 percent of GDP.”

Khosru said the government intends to implement the plan in three phases to accelerate the economy, describing it as the 3R strategy -- Recovery & Stabilization, Restoration and Reconstruction for Acceleration.

According to him, the plan’s first phase covers a one-year economic recovery period, followed by a transition phase of one to three years, and a final phase aimed at building a prosperous economy over five years.