IMF sees slower expansion in FY27, persistent inflation

Bangladesh’s economic recovery is likely to remain fragile over the next two fiscal years, with the International Monetary Fund projecting growth of 4.7% in the 2025-26 fiscal year before a further slowdown to 4.3% in FY27, underscoring persistent macroeconomic pressures from inflation, weak investment and external shocks.
The latest forecast, released on Tuesday, comes as policymakers attempt to restore growth momentum amid elevated price pressures, a stressed banking sector and rising uncertainty linked to the ongoing conflict in the Middle East, which continues to disrupt global energy markets and supply chains.
While the IMF kept its FY26 growth forecast unchanged at 4.7% from its January projection, it expects momentum to weaken in the following fiscal year, signalling that the economy may take longer than anticipated to return to its pre-slowdown trajectory.
Inflation is projected to rise to 9.2% in FY26, up from an earlier estimate of 8.9%, before easing to 6% in FY27, provided external supply shocks subside and domestic conditions improve.
The IMF’s projection remains below the government’s provisional target of 6.5% GDP growth for FY27, set as part of its broader ambition to restore a high-growth path and build a US$1 trillion economy by 2034. 
The government has also set an inflation target of 7.5% for FY27, above the IMF’s estimate.
Despite the expected moderation, the IMF’s growth outlook is more upbeat than recent forecasts from other multilateral lenders.
The World Bank earlier projected Bangladesh’s economy to grow by 3.9% in FY26 before improving to 4.6% in FY27, warning that slowing growth, persistent inflation, weak revenue mobilisation and subdued private investment continue to weigh on the outlook.
Similarly, the Asian Development Bank forecast GDP growth at 4% in FY26 and 4.7% in FY27, while cautioning that inflation could remain elevated at around 9% this fiscal year.

Economists say the divergence in forecasts reflects uncertainty surrounding Bangladesh’s external sector and the duration of geopolitical tensions, particularly their impact on fuel import costs and domestic inflation.
Multilateral agencies warn that a prolonged conflict in the Middle East could further disrupt oil and gas supplies, push up transport and production costs, and constrain monetary and fiscal policy flexibility.