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It warns that uncertainty about the country’s political future may further affect investment
Published : 23 Apr 2025, 09:43 PM
Bangladesh’s economy continues to reel from political turmoil following a sudden change in government, with investment slumping and business activity slowing amid sustained high inflation.
The World Bank has now projected gross domestic product (GDP) growth for the current fiscal year 2024–25 to drop further to 3.3 percent.
The forecast, released on Wednesday, marks the lowest growth since the pandemic hit in 2020.
Between 2010 and the COVID-19 outbreak, Bangladesh consistently posted growth above 6 percent.
Even during the pandemic and the period that followed, growth remained above 5 percent.
The World Bank had earlier predicted 4 percent growth in October, but now cites a combination of political instability and economic disruption during the July-August anti-government movement as key reasons behind the revision.
The report suggests growth could improve to 4.9 percent in the FY 2025–26, though both projections have been downgraded from October's estimates.
The findings are part of the World Bank’s latest South Asia Development Update, April 2025: Taxing Times, which reviews the region’s economic landscape, including a detailed analysis of Bangladesh’s outlook.
“This primarily reflects that the disruptions arising from last summer’s social unrest and political tensions,” the report reads.
“It also reflects the trade disruptions, the persistence of inflation, worsening bank health, governance challenges, and general uncertainty about the country’s political future, all of which will be contribute to an expected decline in investment.
In a previous update on Apr 9, the Asian Development Bank (ADB) forecast 3.9 percent growth for the current year, down from its earlier estimate of 5.1 percent in September.
The report shows the growth outlook has been scaled back not just for Bangladesh but for the entire region.
According to the World Bank, South Asia’s economy grew by 6 percent in 2024, which is 0.4 percentage points lower than the projection made last October.
It said most countries in the region, particularly Bangladesh, faced lower-than-expected outcomes due to anti-government protests and a sudden change in government in August.
The ousted Awami League government had set a 6.75 percent growth target for FY2024–25 in its national budget.
But the situation changed rapidly when protests over public service quota reforms spiralled into a broader political movement that eventually led to the fall of the Sheikh Hasina administration.
The interim government, which took over following the transition, has pledged structural reforms and measures to repair the economy, but business confidence and overall economic momentum are yet to recover.
