World Bank has revised Bangladesh’s economic growth forecast for FY25, lowering it by 1.7% to 4%, citing “significant uncertainties” following political turmoil and “data unavailability.” The report, part of the “South Asia Development Update,” highlights political unrest and economic uncertainty as key reasons for the downgrade. This projection marks Bangladesh’s slowest growth since FY20, when the economy grew by only 3.45% due to the pandemic.
The revision is significantly lower than the previous Awami League government’s growth target of 6.75%. Bangladesh and the Maldives were the only South Asian countries to see their forecasts reduced, with Bangladesh experiencing a larger cut. The report also attributes the slowdown to subdued investment and industrial growth amid political instability, along with modest agricultural setbacks caused by recent floods.
Despite the short-term outlook, the World Bank expects growth to gradually recover through reforms in the financial sector, improved business climate, and enhanced trade. Inflation remains a challenge, with Bangladesh’s rate above target since June 2022, reaching 11.7% in July 2024 due to supply chain disruptions and political tensions. The central bank raised the monetary policy rate to combat inflation, but real rates remain negative.
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