Dhaka, Bangladesh – April 23, 2025
The World Bank has revised its growth forecast for Bangladesh, projecting that the country’s real GDP growth will slow to 3.3% in the current fiscal year (FY25). This marks a significant decline from earlier projections, as the nation grapples with political unrest, subdued investment, and global economic challenges.
Factors Behind the Slowdown
The World Bank’s latest South Asia Development Update, titled Taxing Times, attributes the slowdown to a combination of domestic and international factors:
- Political instability: Widespread political violence, curfews, and internet shutdowns have disrupted economic activity, particularly in the first quarter of FY25.
- Decline in investment: Both private and public investments have seen sharp declines. Private sector credit growth expanded by only 7.3% year-on-year in December 2024, the slowest pace in three decades.
- Global trade disruptions: High input costs and borrowing rates, coupled with uncertainties in global trade, have further constrained private investment.
Public Investment and External Sector
Public investment is also expected to decline due to reduced capital expenditure. However, the report notes some relief from easing external sector pressures and a narrowing current account deficit.
Regional Context
The World Bank forecasts that South Asia’s GDP growth will slow to 5.8% in 2025, down by 0.4 percentage points from previous estimates. Despite the challenges, the region is expected to rebound to 6.1% growth in 2026.
Call for Reforms
The World Bank has urged Bangladesh to implement targeted reforms to address fiscal fragility, improve tax collection, and boost private sector dynamism. Martin Raiser, the World Bank Vice President for South Asia, emphasized the need for resilience, stating, “Multiple shocks over the past decade have left South Asian countries with limited buffers to withstand an increasingly challenging global environment.”
