World Bank forecasts 4.8pc GDP growth for Bangladesh in FY26

The global lender signals a turnaround by FY27, with GDP set to reach 6.3 percent

The World Bank has projected Bangladesh’s gross domestic product (GDP) growth at 4.8 percent for the fiscal year 2025–26, indicating a modest pickup from earlier estimates.

According to the global lender, an uptick in exports, steady remittance inflows, improved foreign exchange reserves, a more stable exchange rate, and a positive financial account towards the end of FY25 are expected to support the projected growth.

Just last week, the Asian Development Bank suggested Bangladesh’s growth could reach 5 percent in the same period.

The World Bank, however, offered a more conservative outlook in its Bangladesh Development Update released on Tuesday.

The report notes that in the decade before the COVID-19 pandemic, Bangladesh averaged GDP growth of 6.6 percent.

That momentum briefly continued post-pandemic, backed by stimulus packages and expansionary monetary policy.

In FY23, growth faltered due to weakened external debt servicing capacity and persistently high inflation. That year’s growth came in at 5.8 percent -- the lowest in 13 years.

The report also notes that, beginning this fiscal year, Bangladesh Bank adopted a contractionary monetary stance. Measures included allowing a market-based exchange rate, lifting caps on bank lending rates, and increasing the policy rate. As a result, overall lending rates have risen.

The World Bank observed that the rise in lending rates has slowed private sector investment, while deposit growth in the banking sector has also weakened.

These developments, the report suggests, are likely to keep GDP growth at 4.8 percent by the end of the current fiscal year.

Looking ahead, the lender forecasts a stronger recovery, with growth expected to reach 6.3 percent in FY27.