Interim government of Bangladesh has scaled back the ambitious macroeconomic targets previously set by the ousted Sheikh Hasina administration, forecasting a more modest economic growth trajectory for the coming years. In its proposed national budget for the fiscal year 2025–26 (FY26), the government now projects a GDP growth rate of 5.5%, a significant downward revision from the 6.75% target set earlier for FY25.
The target for the current fiscal year (FY25) has also been officially revised down to 5.0%, from the original goal of 6.75%, due to persistent economic challenges at both domestic and international levels. However, provisional data from the Bangladesh Bureau of Statistics (BBS) paints an even grimmer picture, estimating that actual growth in FY25 will stand at only 3.97%, marking the lowest rate in several years.
This revised projection reflects continued economic headwinds, including elevated inflation, a weakening external sector, and pressures on foreign exchange reserves. Finance Adviser Dr. Salehuddin Ahmed, in his FY26 budget speech delivered on Monday, emphasized the challenges of taming inflation, which remains a policy priority, and acknowledged that these efforts might further dampen short-term growth.
“According to provisional estimates, GDP growth in FY25 could be 3.97 per cent. However, we expect the final estimate to be higher. We also expect that the growth rate will rise to 6.5 per cent in the medium term in FY28,” said Dr. Ahmed.
Looking ahead, the interim government has adopted a more realistic medium-term macroeconomic framework, targeting a 6.0% GDP growth rate by FY27, with a projected recovery to 6.5% by FY28, contingent upon macroeconomic stability, renewed investment flows, and successful inflation control.
Sector-Wise Performance in FY25
The BBS provisional figures also show subdued performance across key sectors:
· Agriculture: 1.79% growth
· Industry: 4.34% growth
· Services: 4.51% growth
These modest numbers fall significantly short of both the original 6.75% and the revised 5.25% growth targets for FY25, underscoring the economic slowdown and reinforcing concerns among economists and development partners.
International agencies align with lower projections
The downward revisions by the government are consistent with estimates released earlier by global financial institutions:
· International Monetary Fund (IMF): 3.76%
· Asian Development Bank (ADB): 3.9%
· World Bank (WB): 3.3%
Such forecasts reflect the broader macroeconomic vulnerabilities facing Bangladesh, particularly due to sluggish export growth, high import bills, and declining remittances.
GDP size and per capita income
Despite the overall economic slowdown, Bangladesh’s nominal GDP has continued to expand, reaching an estimated Tk 55.527 trillion or approximately $462 billion in FY25. The government projects this to grow to $487 billion in FY26, assuming a 5.5% growth rate.
Encouragingly, per capita income has seen a modest rise, increasing to $2,820 in FY25, up from $2,738 in the previous year, suggesting that despite the overall slowdown, individual income levels have not stagnated entirely.
Budget Focus: LDC graduation and inclusive growth
The FY26 budget outlines the government’s strategic vision to accelerate economic growth while preparing the nation for graduation from Least Developed Country (LDC) status. The budget aims to stimulate domestic production and job creation through targeted measures, including:
· Support for local industries and export-oriented enterprises
· Expansion of heavy industrial sectors
· Promotion of the “Made in Bangladesh“ initiative
· Encouragement of foreign and domestic investment
· Implementation of trade facilitation policies
These initiatives are designed not only to lift GDP growth but also to position Bangladesh for sustainable development and its transition into the upper-middle-income category over the coming decade.
Comment here