ADB cuts Bangladesh’s FY2027 growth forecast to 4%

The Asian Development Bank (ADB) has cut Bangladesh’s economic growth forecast for fiscal year (FY) 2027 to 4.0%, down from the 4.5% projection made in its July outlook. It has estimated growth at 3.7% for FY2026.

According to the ADB’s latest Asian Development Outlook (ADO) September 2026, released on Wednesday, economic activity slowed during the final quarter of FY2026 due to supply chain disruptions stemming from the conflict in the Middle East, although the overall impact is expected to remain limited.

The growth outlook is supported by expectations of stronger consumption and investment as political uncertainty eases following the general election held in early 2026.

Inflation declined to an estimated 8.7% in FY2026 from 10.0% in FY2025, but is projected to rise to 9.0% in FY2027. The ADB said inflation is likely to remain elevated due to energy shortages, high production and transportation costs, possible shipping disruptions, delayed El Niño effects on food prices, and gradually easing monetary conditions.

The current account deficit is expected to widen to 0.6% of GDP in FY2027 from an estimated 0.3% in FY2026, as import growth is projected to outpace exports.

Remittance inflows are expected to remain resilient despite continuing tensions in the Middle East. Strong remittances and rising foreign exchange reserves are likely to support external stability, although this will depend on adequate financial inflows, exchange rate flexibility and prudent macroeconomic management.

The ADB said the services and agriculture sectors are expected to contribute to growth in FY2027. However, industrial activity and investment are likely to face constraints from high borrowing costs, limited access to credit, energy shortages, weak external demand and other structural challenges.

Private consumption, supported by remittance inflows, is expected to remain the main engine of growth, although persistent inflation will continue to erode household purchasing power.

The report also highlighted significant downside risks, including a prolonged Middle East conflict, higher oil prices, further disruptions to global shipping, tighter trade restrictions, weaker growth in major export markets, continued exchange rate pressures, additional stress in the banking sector, delays in fiscal reforms, lower-than-expected development spending and climate-related shocks. These factors could further weaken growth and keep inflation elevated.

ADB Country Director Qingfeng Zhang said Bangladesh’s economy is beginning to recover, but the recovery remains vulnerable to external shocks and domestic constraints.

“This is an important moment to accelerate reforms in macroeconomic management, the financial sector, energy security, and the business environment. These reforms will be essential to unlock private investment, create quality jobs, and place Bangladesh on a stronger, more inclusive, and resilient growth path,” he said.

Zhang added that the ADB is ready to support Bangladesh in translating these reforms into tangible results for its people.