Bangladesh’s economic growth is set to slow further after a modest recovery, the International Monetary Fund said, warning that persistent inflation, weak investment and structural vulnerabilities could weigh on the outlook.
The IMF expects gross domestic product to grow by 4.7% in the fiscal year ending 2026, before easing to 4.3% in FY2027, according to its latest assessment, underscoring a fragile recovery following a sharp slowdown in recent years.
The projections highlight a widening gap with the government’s target of 6.5% growth for FY2027, raising concerns over the pace and sustainability of the country’s economic rebound.
Bangladesh’s economy, once among Asia’s fastest growing, has struggled to regain momentum after growth dropped to below 4% in FY2025 amid domestic financial stress and external shocks. While macroeconomic conditions have stabilized, the IMF signalled that underlying weaknesses continue to constrain expansion.
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Inflation remains a key challenge, with consumer prices expected to stay elevated near 9% in FY2026 before gradually easing to around 6% the following year. Persistently high prices have eroded purchasing power and dampened domestic demand, complicating the recovery.
The Fund also pointed to structural issues, including a fragile banking sector, low tax revenue collection and subdued private investment, as major impediments to stronger growth. Reform delays in these areas could keep the economy locked in a lower growth trajectory, it added.
Externally, Bangladesh faces rising risks from global uncertainties, including higher energy costs and geopolitical tensions in the Middle East that could disrupt supply chains and widen the country’s import bill.
Compared with regional peers, Bangladesh’s outlook appears weaker. South Asia is projected to grow at over 6% on average, with economies like India significantly outperforming, highlighting Bangladesh’s relative slowdown.
Despite the headwinds, the IMF said medium-term growth could recover toward 6% if authorities accelerate reforms, particularly in the financial sector, tax administration and exchange rate management.
For now, however, the outlook suggests Bangladesh may remain in a subdued growth phase, with limited upside unless both domestic and external conditions improve significantly.
