IMF projects modest recovery in FY26

Following projections by the Asian Development Bank (ADB) and the World Bank, the International Monetary Fund (IMF) has forecast a modest recovery for Bangladesh's economy in the current fiscal year (FY).

The IMF expects GDP growth to reach 4.9 percent in FY2025-26, up from 3.8 percent in FY25, according to its World Economic Outlook released yesterday in Washington, DC, during the annual IMF-World Bank meetings.

Earlier in June, the multilateral lender had projected a higher growth rate of 5.4 percent for Bangladesh in FY26, citing political uncertainty, a tighter policy mix, rising trade barriers, and stress in the banking sector. The downward revision of roughly 0.5 percentage points by October comes without a detailed explanation.

The IMF's latest projection comes a week after the World Bank, in its latest Bangladesh Development Update, projected 4.8 percent growth for the current fiscal year and expected it to accelerate to 6.3 percent in FY27.

Prior to that, the ADB, in its Asian Development Outlook on September 30, projected 5 percent GDP growth in FY26, mainly driven by increased public consumption.

The bank, however, noted headwinds from global trade shocks, persistent inflation, and domestic financial sector fragilities but predicted moderate economic expansion compared to last year.

"Future growth will depend on improving the business environment to boost competitiveness and attract investment, and on ensuring reliable energy supplies," Hoe Yun Jeong, ADB country director for Bangladesh, said in the report.

Recent data from Bangladesh Bank show early signs of recovery. In July, letters of credit for capital machinery imports rose 0.72 percent, while total imports increased over 19 percent and exports grew 27 percent year-on-year.

However, private sector credit growth continued to decline in August, falling to 6.35 percent, following a multi-month downward trend.

The Bangladesh Bureau of Statistics (BBS) has already published the provisional GDP growth figure for the last fiscal year, which stands at 3.8 percent.

According to the IMF's latest projection, inflation in the current fiscal year is expected to be 8.7 percent, down from 10 percent in the previous year.