The Asian Development Bank (ADB) has revised Bangladesh’s GDP growth forecast, predicting a slowdown to just 3.9% for the fiscal year 2024-25. The revised projection reflects weaker domestic demand and a combination of political and economic challenges gripping the country.

Despite steady performance in garment exports—a backbone of the nation’s economy—multiple factors are dampening growth. Political uncertainty, high inflation, supply chain bottlenecks, and unrest in industrial sectors are all contributing to a more fragile outlook. The growth rate in the previous fiscal year stood at 4.2%, signaling a continuing downward trend.

Rising Inflation Worsens Economic Strain

Inflation is expected to climb further, reaching 10.2% in FY2025, up from 9.7% last year. This uptick is being driven by declining competition in wholesale markets, lack of timely market information, disruptions in supply chains, and the weakening of the Bangladeshi taka. Everyday essentials are becoming more expensive, squeezing household budgets and discouraging spending.

ADB Urges Structural Reforms

Hoe Yun Jeong, ADB’s Country Director for Bangladesh, has underscored the need for wide-ranging reforms to rebuild economic resilience. His key recommendations include:

– Diversifying the economy to reduce overdependence on the garment sector and spur private sector development in emerging industries.
– Developing disaster-resilient infrastructure to protect long-term growth.
– Enhancing energy security to ensure industrial continuity and investment confidence.
– Improving governance in the financial sector to restore investor trust.
– Attracting more foreign direct investment through regulatory reform and improved ease of doing business.

These measures, if implemented effectively, could counter the current downward pressure on the economy and open new paths for sustainable growth.

Recovery on the Horizon?

The ADB remains cautiously optimistic about a recovery starting in FY2026, projecting GDP growth to rebound to 5.1%. This recovery hinges on expectations of easing inflation and stronger inflows of remittances, which could help revive domestic consumption and private investment.

While Bangladesh faces immediate headwinds, strategic shifts and policy improvements could help the country regain momentum and navigate through turbulent times.