Bangladesh expected to see 4.8pc GDP growth in FY26: WB

Business Report :

Bangladesh’s GDP growth is projected to reach 4.8per cent in FY26, from 4per cent in the previous fiscal year, and 6.3per cent in FY27, provided that critical economic reforms are effectively implemented, according to the World Bank’s Bangladesh Development Update released on Tuesday.

The report estimates that, the World Bank projected the national poverty rate to decline to 19.1per cent and inflation to ease to 7.4per cent in the current fiscal year (2025-26), down from an estimated 21.2per cent and 10per cent , respectively, a year earlier.

The World Bank said that after remaining elevated for three consecutive years, inflation is projected to ease further, reaching around 5.5 per cent by FY2026-27.
Labour market conditions are projected to improve modestly in FY26, with household labour income rising by almost 3per cent . Inequality is expected to narrow slightly to a Gini index of 33.2.

The report also highlighted that external pressures eased in FY25 as a market-based exchange rate was adopted, foreign exchange reserves stabilized, the current account deficit narrowed, and exports grew robustly.

“The economy has shown resilience, but this cannot be taken for granted,” said Jean Pesme, World Bank Division Director for Bangladesh and Bhutan. He stressed that bold reforms and faster implementation are necessary to strengthen domestic revenue mobilization, address banking sector vulnerabilities, reduce energy subsidies, plan urbanization, and improve the investment climate, ensuring better growth and more jobs.

“The economy has shown resilience, but this cannot be taken for granted,” said Jean Pesme, World Bank division director for Bangladesh and Bhutan.

“To ensure a strong growth path and more and better jobs, Bangladesh needs bold reforms and faster implementation to enhance domestic revenue mobilization, address banking sector vulnerabilities, reduce energy subsidies, plan urbanization, and improve the investment climate,” he added.

Over the past two decades, industrial jobs have increasingly concentrated in Dhaka and Chattogram, prompting the report to call for rethinking spatial development strategies to reduce regional disparities and support inclusive job creation nationwide.
The Bangladesh Development Update accompanies the South Asia Development Update, which projects regional growth at 6.6 percent in 2025 but warns of a looming slowdown. The report highlights the potential of trade openness and AI adoption to boost productivity, investment, and employment.
“South Asia has enormous economic potential and is still the fastest-growing region in the world,” said Johannes Zutt, World Bank Vice President for South Asia. “Countries can boost productivity, spur private investment, and create jobs by maximizing the benefits of AI and lowering trade barriers, especially for intermediate goods.”
The report also emphasized the transformative potential of AI for productivity and incomes, noting that South Asia’s workforce remains concentrated in low-skill agricultural and manual jobs.
Carefully sequenced trade reforms and AI adoption, coupled with policies to reallocate labor to productive sectors, are seen as critical for future growth and job creation, according to Franziska Ohnsorge, World Bank Chief Economist for South Asia.