WB projects Bangladesh’s FY27 GDP growth at 4.6%

The World Bank has sharply downgraded Bangladesh’s economic growth outlook, projecting GDP growth of 4.6% in the 2026-27 fiscal year, significantly below the government’s target of 6.5%.

In its latest Global Economic Prospects (GEP) report released on Friday, the Washington-based lender also cut its growth forecast for the outgoing FY26 to 3.8%, down from the 4.6% projected in January.

The revised outlook reflects mounting concerns over persistent inflation, weak private-sector activity, financial-sector vulnerabilities and growing global uncertainty.

The latest forecast marks a 1.5 percentage-point reduction from the World Bank’s January projection of 6.1% growth for FY27, highlighting a widening gap between official expectations and external assessments.

According to the report, escalating tensions in the Middle East have disrupted global commodity markets and trade flows, driving up energy and food prices across South Asia.

“The disruptions to commodity markets and international trade resulting from the conflict in the Middle East have led to shortages of energy and agricultural products and put upward pressure on energy and food prices,” the report said.

Despite easing political uncertainty, Bangladesh’s private-sector activity remains constrained by rising input costs, weak investor confidence and financial-sector fragility, the lender noted.

“In Bangladesh and Nepal, domestic political uncertainties have waned, but private activity has been constrained by increased input costs and weaker investor sentiment,” it said.

The report also highlighted subdued credit growth and deteriorating asset quality in the banking sector, warning that these weaknesses could continue to weigh on investment and economic expansion.

The World Bank further projected a deterioration in fiscal balances across several South Asian economies, including Bangladesh, as governments increase subsidies to cushion consumers from higher energy prices.

The downgrade comes as Bangladesh seeks to accelerate growth through an expansionary FY27 budget focused on investment, employment generation and infrastructure development. However, economists have warned that persistent inflation, energy shortages, weak revenue mobilisation and sluggish private investment could make the government’s growth target difficult to achieve.

Globally, the World Bank expects growth to slow to 2.5% in 2026 from 2.9% in 2025, while forecasts for nearly two-thirds of economies have been revised downward.

It also warned that disruptions in the Strait of Hormuz could push Brent crude oil prices to an average of US$94 per barrel in 2026, around 36% higher than in 2025, further fuelling inflationary pressures.

World Bank Group President Ajay Banga said developing economies continue to face significant challenges after a decade marked by repeated global shocks.