ADB cuts Bangladesh’s FY2025 growth forecast to 3.9% amid high inflation, weak demand, political transition, and financial vulnerabilities, urging economic reforms and diversification for long-term resilience.
The Asian Development Bank (ADB) has significantly lowered Bangladesh’s economic growth forecast to 3.9% for the fiscal year 2024–25, down from its earlier projection of 5.1% made in September 2024, and even further from the 6.6% forecast in April 2024. The revised projection was announced in the ADB’s latest report titled Asian Development Outlook (ADO) April 2025, released on Wednesday.
According to the report, although Bangladesh has seen some export growth in the ready-made garments sector, the overall economic outlook remains subdued due to a mix of internal and external pressures. The report attributes the lowered growth forecast to weakening domestic demand, ongoing political transition, high inflation, potential natural disasters, and industrial unrest.
Bangladesh’s economy recorded a growth of 4.2% in FY2024. However, the ADB now expects further deceleration, driven particularly by slower growth in services, reduced household purchasing power, and lingering financial sector vulnerabilities.
The report also highlights a concerning inflationary trend. The 12-month average inflation rate is expected to rise to 10.2% in FY2025, up from 9.7% in the previous fiscal year. Factors contributing to this include limited competition in wholesale markets, insufficient market data, supply chain bottlenecks, and depreciation of the Bangladeshi taka.
On a slightly positive note, the current account deficit is projected to narrow to 0.9% of GDP in FY2025 from 1.4% in FY2024. This improvement is attributed to a reduced trade deficit and a steady rise in remittance inflows.
Hoe Yun Jeong, ADB’s Country Director for Bangladesh, emphasized the need for structural economic reforms. “Bangladesh should diversify its economy beyond the garments industry by promoting private sector development. Strengthening financial governance, enhancing energy security, and attracting more foreign investment are vital to boosting growth and creating employment,” he said.
Earlier projections from global financial institutions also indicate a slowdown. The World Bank in January predicted 4.1% growth, while the International Monetary Fund (IMF) cut its estimate to 4.5% in October 2024.
As the country navigates political and economic uncertainty, the ADB stresses the importance of long-term resilience and economic diversification to ensure sustainable growth.
