Bangladesh’s economy is estimated to grow by 4.0% in fiscal year (FY) 2025, rising to 5.0% in FY2026, according to the Asian Development Outlook (ADO) September 2025, released today by the Asian Development Bank (ADB).
Although garment exports remain resilient, the slower growth estimate reflects subdued domestic demand amid ongoing political transitions, recurrent flooding, industrial labor disputes and persistently high inflation. The economy expanded by 4.2% in FY2024.
ADB Country Director for Bangladesh Hoe Yun Jeong Future growth will depend on improving the business environment to boost competitiveness and attract investment, and on ensuring reliable energy supplies.
“The impact of US tariffs on Bangladesh’s trade remains to be seen, and vulnerabilities in the banking sector persist. Addressing these challenges is essential to achieving higher economic performance.”
He said that some downside risks to the FY2026 outlook persist. Trade uncertainty, banking sector weaknesses, and potential policy slippages could impede progress. Maintaining prudent macroeconomic policies and accelerating structural reforms are critical to strengthening resilience.”
Inflation is estimated to rise from 9.7% in FY2024 to 10.0% in FY2025, driven by limited competition in wholesale markets, inadequate market information, supply chain constraints, and the weakening of the taka.
The current account is expected to post a small surplus of 0.03% of GDP in FY2025, up from a deficit of 1.5% of GDP in FY2024, supported by a narrowing trade gap and robust remittance inflows.
Looking ahead, the ADO September 2025 forecasts that consumption will remain the primary driver of growth in FY2026, spurred by robust remittance inflows and election-related spending.
However, contractionary monetary and fiscal policies, along with heightened investor caution, are expected to dampen investment.
Global tariff hikes, including a 20% tariff on Bangladesh exports to the US, and stiffer competition in the EU are expected to weigh on exports and growth.
Exporters may be compelled to reduce unit prices in response to this heightened competition.
On the supply side, services are expected to expand, driven by improved household purchasing power.
Agricultural growth is likely to normalise, contingent on favorable weather and effective government policy support. In contrast, industrial growth may slow as US tariffs constrain economic activity.
