The Asian Development Bank has projected that Bangladesh鈥檚 economic growth would slow to 3.9 per cent in the 2024-25 financial year, down from 4.2 per cent in FY24.
The projection was unveiled at a press conference at the ADB鈥檚 Dhaka office on Wednesday.
The forecast reflected a continuation of the downward trend observed in FY24, when GDP growth decelerated to 4.2 per cent from 5.8 per cent in the previous financial year.
The growth forecasts were finalised prior to announcement of new tariffs by United States鈥� government on April 2. The tariffs may slow down the economic growth further.
The growth slowdown is driven by persistent structural and external challenges, including political instability, high inflation, energy shortages, industrial unrest and weakening global demand.
The ADB also forecasted a modest recovery to 5.1 per cent in FY26, supported by improvements in domestic demand and external conditions.
The ADB said that large-scale manufacturing, one of the key growth drivers, expanded by only 1 per cent in FY24, reflecting subdued production caused by electricity shortages and a drop in export orders.
The services sector also saw moderated growth, while agriculture was hit by adverse weather.
Private consumption remained stable, buoyed by strong remittance inflows, but the net export component of GDP remained negative due to sharper declines in imports than exports.
The ADB also pointed to weak investment and lower credit flow to the private sector as factors limiting growth.
ADB country director for Bangladesh Hoe Yun Jeong, present at the event, warned that Bangladesh faced heightened risks due to recent global trade developments, especially the United States鈥� announcement of a 37-per cent tariff on imports from Bangladesh.
He noted that while it was too early to estimate the full impact, the tariff could hurt Bangladesh鈥檚 exports and overall economy.
To mitigate the effects, Jeong stressed the importance of diversifying both products and export markets.
He said that engaging in dialogue with the United States was crucial in the short term, but broader structural changes were necessary for long-term resilience.
It is vital that Bangladesh proactively negotiates, but also moves swiftly toward export diversification, he said.
Jeong also identified high inflation as the most pressing economic challenge.
Inflation averaged 9.7 per cent in FY24 and is projected to rise to 10.2 per cent in FY25.
Currency depreciation, market inefficiencies and supply chain issues have continued to fuel price hikes, he said.
The local currency, taka, lost 10.2 per cent of its value against the US dollar in FY24, prompting the Bangladesh Bank to introduce a unified crawling peg exchange rate regime aimed at stabilising the market.
Despite these efforts, the country鈥檚 foreign exchange reserves fell, covering only 4.3 months of imports by the end of FY24.
On the banking front, Jeong noted that high non-performing loans and governance weaknesses continued to plague the financial sector.
He said the ADB was closely working with the central bank to address these issues.
With the ADB鈥檚 support, the Bangladesh Bank is currently assessing the asset quality of nine banks, a process expected to be completed by May.
The review aims to provide a clear picture of sectoral vulnerabilities and guide future reforms.
The ADB emphasised the need for urgent structural reforms in revenue mobilisation, financial governance, energy security and investment climate improvement.
The report also highlighted that Bangladesh鈥檚 complex regulatory framework and inconsistent policies had discouraged foreign direct investment, lagging behind regional peers like Vietnam and Cambodia.
Ahead of Bangladesh鈥檚 graduation from least-developed country status in November 2026, the ADB and the Organisation for Economic Co-operation and Development recommended simplifying licensing, reforming tax systems and ensuring regulatory consistency to attract sustained investment and maintain economic stability.
