Staff Correspondent:

The Asian Development Bank (ADB) on Wednesday projected Bangladesh’s gross domestic product (GDP) to grow by 3.9 percent in the current fiscal year (FY2024-25), reflecting weaker domestic demand amid ongoing political and economic challenges.

The projection was made in the ADB’s flagship publication, Asian Development Outlook (ADO) April 2025.

ADB Country Director for Bangladesh Hoe Yun Jeong released the report at a programme held at the ADB resident mission here.

According to the report, Bangladesh’s economy is expected to recover moderately, with GDP growth projected to rise to 5.1 percent in the next fiscal year (FY2025-26).

ADB Country Director for Bangladesh Hoe Yun Jeong said despite facing external and domestic headwinds, Bangladesh’s economy continues to show resilience, which can be fortified by implementing crucial structural reforms.

“Bangladesh should diversify its economy beyond the readymade garments sector by fostering private sector development. Enhancing resilient infrastructure, improving energy security, strengthening financial sector governance, and attracting foreign investment are crucial to accelerating growth, creating jobs, and boosting competitiveness,” he said.

The ADO mentioned that inflation is forecast to accelerate from 9.7% in FY2024 to 10.2% in FY2025 due to stifled competition in wholesale markets, inadequate market information, supply chain constraints, and the depreciation of the taka.

The current account deficit is anticipated to shrink from 1.4% of GDP in FY2024 to 0.9% of GDP in FY2025 as the trade deficit narrows and remittances rise.

The ADO April 2025, however, projected that consumption and investment will grow moderately, driven by strong remittance inflows but partly offset by contractionary monetary and fiscal policies and investor caution.

Global tariff increases are also expected to affect Bangladesh’s exports and economic growth over the course of time, it said.

On the supply side, services growth is expected to be slower due to political uncertainty, financial sector vulnerability, and reduced household purchasing power.

Agricultural growth is likely to moderate following repeated floods, while industry growth is expected to improve marginally with a rebound in manufacturing aided by export growth, the ADO stated.

The growth forecasts were finalised prior to the 2 April announcement of new tariffs by the US administration, so the baseline projections only reflect tariffs that were in place previously.

However, ADO April 2025 does feature an analysis of how higher tariffs may affect growth in Asia and the Pacific.