Written by The Banking Post
The World Bank has lowered Bangladesh’s economic growth forecast, projecting GDP growth at 4.6 percent in fiscal year 2026-27, signaling a slower-than-expected recovery amid domestic and global challenges.
In its latest Global Economic Prospects (GEP) report released on Friday, the World Bank also revised down Bangladesh’s growth estimate for the outgoing FY2025-26 to 3.8 percent, down from its earlier projection of 4.6 percent made in January. The lender had previously forecast 6.1 percent growth for FY27, meaning the latest estimate reflects a sharp 1.5 percentage-point downgrade.
The revised outlook falls well below the government’s target of 6.5 percent GDP growth for the next fiscal year.
According to the World Bank, escalating tensions in the Middle East are expected to slow global economic activity, pushing up energy prices, inflation and borrowing costs. Global growth is now projected to ease to 2.5 percent in 2026, down from 2.9 percent in 2025, before recovering modestly to 2.8 percent in 2027.
The report noted that disruptions in commodity markets and global trade due to the Middle East conflict have created shortages of energy and agricultural products, putting upward pressure on fuel and food prices across South Asia.
For Bangladesh, inflation remains elevated despite tight monetary policy. The lender said higher input costs and weak investor confidence continue to restrain private-sector activity.
“In Bangladesh and Nepal, domestic political uncertainties have eased, but private activity remains constrained by rising input costs and weaker investor sentiment,” the report said.
The World Bank also warned that Bangladesh’s financial sector remains fragile, citing sluggish credit growth and deteriorating asset quality as key concerns.
Fiscal pressure is expected to intensify as well. The lender projects Bangladesh’s fiscal deficit to widen in 2026, partly due to increased subsidies aimed at cushioning the impact of higher global energy prices.
The report further warned that prolonged weak growth across developing economies is slowing income convergence with advanced economies. It said many developing nations are struggling to recover after years of economic shocks.
The World Bank highlighted additional risks from energy market disruptions. If supply shocks worsen, Brent crude prices could average $94 per barrel in 2026, around 36 percent higher than 2025 levels, further fueling inflationary pressure.
Rising fertiliser costs may also push up food prices, lifting global inflation to 4.0 percent this year, compared with 3.3 percent in 2025.
The lender cautioned that if energy disruptions become more severe and trigger financial stress, global growth could fall as low as 1.3 percent in 2026, with inflation rising to 4.4 percent.
