20.05.2026
Bangladesh’s economy remained under pressure in 2025, reflecting the after-effects of political disruption, weak investment, high inflation and financial-sector stress. Growth is expected to recover only gradually in 2026–2027, supported by remittances, exports and a modest improvement in confidence, but it will remain below Bangladesh’s pre-pandemic trend. Inflation is projected to decline from double-digit levels, although it remains elevated and vulnerable to food, energy and exchange-rate pressures. Fiscal space is limited by very low revenue mobilisation, while public debt is expected to rise gradually. The external position has improved compared with the recent crisis period, but reserves, exports and remittances remain key vulnerabilities.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 3.5 | 3.9 | 4.6 |
| Inflation (%, yoy) | 10.0 | 8.6 | 7.5 |
| International poverty rate ($3.00, 2021 PPP, %) | 9.0 | 8.7 | 8.0 |
| Fiscal balance (% of GDP) | -3.5 | -4.4 | -4.9 |
| Gross public debt (% of GDP) | 39.5 | 41.9 | 44.4 |
| Current account balance (% of GDP) | 0.0 | -0.8 | -1.0 |
Growth recovers only gradually
Bangladesh’s real GDP growth slowed to 3.5% in 2025, reflecting weak investment, political uncertainty and disruptions following the 2024 student-led uprising. Growth is projected to recover to 3.9% in 2026 and 4.6% in 2027, but this remains below Bangladesh’s earlier growth trajectory. The recovery is expected to be constrained by domestic economic challenges, financial-sector weaknesses and external uncertainty.
The recovery will depend on a gradual improvement in private investment, export performance and confidence after elections. Remittances remain an important stabilising factor, while garment exports and services activity should support growth. However, weak banking-sector balance sheets, low investor confidence, energy shortages and policy uncertainty continue to weigh on the outlook.
Inflation remains elevated but is expected to decline
Inflation averaged 10.0% in 2025 and remained high in early 2026, although it had begun to moderate. It is projected to ease to 8.6% in 2026 and 7.5% in 2027, but the decline is expected to be gradual.
The disinflation path remains fragile. Food prices, energy costs, exchange-rate depreciation, trade disruptions and higher import costs could keep inflation high for longer. Maintaining a tight policy stance and credible exchange-rate management will be important for reducing inflation while protecting vulnerable households.
Fiscal space remains limited
Bangladesh’s fiscal deficit narrowed to 3.5% of GDP in 2025, partly because of under-execution of capital and social spending. It is projected to widen to 4.4% in 2026 and 4.9% in 2027, reflecting higher current expenditure, fuel subsidy needs, bank recapitalisation costs and increased social spending commitments.
Public debt remains moderate compared with many peers, but it is projected to rise from 39.5% of GDP in 2025 to 44.4% in 2027. The key fiscal weakness is not the debt ratio itself, but Bangladesh’s very low revenue base. Tax reform, stronger revenue administration and better prioritisation of spending will be essential for preserving debt sustainability.
External position improves but remains fragile
The current account was broadly balanced in 2025, helped by remittances, import compression and improved reserve management. However, it is projected to return to deficit, at 0.8% of GDP in 2026 and 1.0% in 2027, as imports recover and export growth remains constrained.
External vulnerabilities remain significant. Bangladesh is exposed to slower global garment demand, higher energy prices, weaker remittances from the Gulf, exchange-rate pressures and trade-route disruptions. Rebuilding reserves and maintaining exchange-rate flexibility will be essential for restoring external stability.
Overall outlook
Bangladesh is expected to recover gradually in 2026–2027, but the outlook remains fragile. Growth should improve from the weak 2025 level, while inflation is expected to decline only slowly. Fiscal and external buffers remain limited, and financial-sector weaknesses continue to constrain investment. Sustained improvement will depend on tax reform, banking-sector restructuring, stronger governance, exchange-rate flexibility, export diversification and policies that support job creation, especially for young workers.
Sources:
World Bank, Bangladesh Macro Poverty Outlook, April 2026.
International Monetary Fund, Bangladesh: 2025 Article IV Consultation and Staff Report, January 2026.
International Monetary Fund, World Economic Outlook, April 2026.
Asian Development Bank, Asian Development Outlook, April 2026: Bangladesh.
Bangladesh Bank, Monetary Policy Statement and external-sector updates, 2026.
