IMF joins WB, ADB in lowering Bangladesh growth outlook

The International Monetary Fund (IMF) has cut its economic growth forecast for Bangladesh in the current fiscal year (FY27) to 3.2 percent from 4.3 percent projected in April, joining other major development partners in downgrading their outlooks amid persistent economic challenges.

The latest forecast, unveiled today in the IMF's World Economic Outlook report during the annual meetings of the IMF and World Bank Group in Bangkok, is lower than the latest projections of both the World Bank and the Asian Development Bank (ADB).

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The World Bank has recently projected 3.4 percent growth for Bangladesh in FY27, down from its April projection of 4.6 percent. The ADB, in September, trimmed its growth projection for Bangladesh to 4 percent from its earlier forecast of 4.5 percent made in July.

The IMF, in its latest report, also projected inflation in Bangladesh to rise to 10.9 percent in the current fiscal year, reversing the easing seen in the previous fiscal year, when consumer price inflation fell to 8.7 percent from 10 percent.

Bangladesh's GDP growth stood at 3.6 percent in FY26, compared with 3.5 percent in FY25, the lender said.
The IMF's regional outlook for FY27 shows wide disparities in growth and inflation across South Asia. India is projected to lead the region with 7 percent GDP growth and 4.4 percent inflation, while Bhutan is expected to grow 6.9 percent, with inflation at 6.5 percent.

The Maldives is forecast to record 3.8 percent growth and 2.5 percent inflation. Nepal and Sri Lanka are each projected to expand by 3.7 percent, with inflation estimated at 5.8 percent and 5.4 percent, respectively.

The World Bank earlier this month warned that Bangladesh was on course for a fourth consecutive year of slowing economic growth, as energy shortages, banking sector vulnerabilities, subdued credit growth and tight fiscal constraints continue to weigh on the economy. 

In its latest economic update on Bangladesh and South Asia, the lender revised growth projections for most countries from its previous forecast.

“The main exception is Bangladesh, whose forecast has been continually downgraded in recent years,” the World Bank said in its report.

Bangladesh's GDP growth reached 7.1 percent in FY22 before slowing in subsequent years. Growth fell below 4 percent in FY25, and the World Bank expects the weakness to persist through FY28.

The lender had expected a recovery in economic activity following the return of political stability. However, the rebound has yet to materialise, prompting it to cut its growth forecast for FY27.

“This deterioration reflects a more protracted drag from energy shortages, banking sector weakness, subdued credit growth, and tighter fiscal constraints than previously anticipated. Export growth is expected to remain weak,” the World Bank said.

The slowdown is particularly evident in industry. Industrial output grew by just 2 percent in FY2025-26, while the industrial sector contracted in the third quarter for the first time since the pandemic, according to the report.

Private investment has also been constrained by uncertainty over energy supplies and weaknesses in the banking sector.

Private sector credit growth fell to a 33-year low of 4.5 percent in June 2026, reflecting weak business confidence, banking sector vulnerabilities and disruptions to energy supplies.

Government investment has also fallen to a historic low amid acute fiscal constraints and implementation challenges, weighing on domestic demand in the short term and the economy’s longer-term growth potential, the report said.