TBT DESK: Bangladesh’s economy is expected to stage a gradual recovery over the next two fiscal years, according to the latest outlook by the Asian Development Bank (ADB).

In its Asian Development Outlook (ADO) April 2026, the ADB forecasts that gross domestic product (GDP) growth will rise to 4.0 per cent in fiscal year (FY) 2026 and further to 4.7 per cent in FY2027, up from 3.5 per cent recorded in FY2025.

The report attributes the improved outlook to a rebound in domestic consumption and investment, supported by easing political uncertainty following the general election. Although economic activity was disrupted in late FY2025 due to supply chain challenges linked to conflict in the Middle East, these effects are expected to diminish.

ADB Country Director Hoe Yun Jeong noted that Bangladesh continues to face a challenging economic environment marked by global uncertainties, structural constraints, and pressure on external and financial sectors. However, he emphasised that the new government’s reform agenda presents an opportunity to restore macroeconomic stability and boost private sector confidence.

Inflation is projected to remain high at around 9.0 per cent in FY2026, driven by elevated global energy prices and supply disruptions, before easing slightly to 8.5 per cent in FY2027 as conditions improve.

The country’s current account balance is expected to remain in deficit, estimated at 0.5 per cent of GDP in FY2026 and widening to 0.6 per cent in FY2027, largely due to increased import demand and a growing trade gap. Nevertheless, remittance inflows are anticipated to stay resilient despite geopolitical tensions in key labour markets.

On the supply side, the services sector is likely to recover, aided by improved household purchasing power and increased social protection spending. Agriculture is projected to stabilise under favourable weather conditions, while industrial output is expected to strengthen, supported by export growth and infrastructure development initiatives.

Despite the optimistic outlook, the ADB warned of significant downside risks. Prolonged global conflicts could disrupt energy markets and supply chains, leading to higher fuel costs and inflationary pressures. Additionally, weaker economic conditions in Middle Eastern countries could affect remittance inflows and exports, further straining Bangladesh’s external balance.

Climate-related shocks were also identified as a persistent threat to economic stability.

The ADB concluded that while the economy is on a recovery path, sustained reforms and prudent macroeconomic management will be essential to ensure resilient and inclusive growth in the coming years.