Bangladesh’s economic growth is set to slow to 4.1% this fiscal year (FY25), the weakest pace since the pandemic, as political turmoil in mid-2024 weighed on activity and deteriorated investor confidence, the World Bank said on Thursday (16 January).
In its latest edition of Global Economic Prospects report, the global lender warned amid heightened political uncertainty, the country’s investment and industrial activity are expected to remain subdued in the near term.
Growth has already decelerated for two consecutive years, with the World Bank estimating FY24 expansion at 5%.
This figure contrasts with provisional data from the Bangladesh Bureau of Statistics (BBS), which reported growth at 5.82% but has yet to finalize the numbers.
“Supply constraints, including energy shortages and import restrictions, weakened industrial activity and led to increased price pressures,” the report highlighted. “High inflation reduced the purchasing power of households, slowing services growth.”
Despite the dismal short-term outlook, the World Bank remains cautiously optimistic about the future, projecting that Bangladesh’s GDP growth to pick up to 5.4% in the next fiscal year (FY26), assuming broad political stability, successful reforms in the financial sector, an improved business climate, and increased trade. Easing inflation is expected to boost private consumption.
Nevertheless, the immediate economic picture remains grim. Recent BBS data revealed a marked slowdown across Bangladesh’s three key GDP components—agriculture, industry, and services—in the first quarter of FY25.
The provisional figures are alarming. According to BBS, GDP growth slowed to just 1.81% in the July-September period, the slowest pace in 15 quarters or nearly four years.
This stands in stark contrast to the 6.04% growth recorded in the same period last fiscal year.
Meanwhile, a month ago, government has revised its GDP growth projection for FY25 downward to 5.25%, from the initial estimate of 6.75%.
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