The World Bank published its twice-yearly Bangladesh Development Update, reviewing recent macroeconomic developments and the medium-term outlook with a special focus on financial sector stability. It reports that real GDP growth fell to 4.2% in FY24 from 5.8% in FY23 and expects growth to moderate further to 3.3% in FY25 as private and public investment decline, while anticipating a gradual recovery in the medium term if critical reforms are implemented. A sharp slowdown in export growth and low investment are cited as key drivers of the FY24 deceleration, alongside continued challenges from elevated inflation and financial sector vulnerabilities. External pressures are described as having eased in FY25, supported by stronger remittance inflows and exports that bolstered the current account balance, but political uncertainty and higher borrowing and input costs are expected to weigh on private investment and industrial activity, and public investment is set to fall as capital expenditure is reduced in FY25. The fiscal deficit is expected to remain under 5% of GDP in the medium term with only gradual increases in capital spending, and inflation is expected to stay elevated near term before easing on the back of tight monetary policy, fiscal consolidation and relaxed import restrictions for key food commodities; downside risks include trade uncertainty, persistent inflation, weak demand in major export markets and intensifying financial sector vulnerabilities. The update is positioned as a companion to the World Bank’s South Asia Development Update, which projects regional growth at 5.8% in 2025 and 6.1% in 2026 and highlights domestic revenue mobilization challenges.
World Bank 2025-04-23
World Bank Bangladesh Development Update projects FY25 GDP growth at 3.3% and underscores need for financial sector and fiscal reforms
The World Bank's Bangladesh Development Update reports a decline in real GDP growth to 4.2% in FY24 from 5.8% in FY23, with further moderation to 3.3% expected in FY25 due to reduced private and public investment. Challenges include low export growth, elevated inflation, and financial sector vulnerabilities, though external pressures have eased with stronger remittance inflows. The fiscal deficit is projected to remain under 5% of GDP, with inflation expected to ease in the medium term amid tight monetary policy and fiscal consolidation.