Dhaka, Bangladesh (BBN)- After facing disruptions in the first half of FY’25, Bangladesh’s economy regained momentum in the second half, driven by strong export growth, record remittance inflows, and rising foreign exchange reserves, according to the World Bank’s latest Bangladesh Development Update released on Tuesday.
The report projects GDP growth to edge up from 4.0 per cent in FY’25 to 4.8 per cent in FY’26 and further to 6.3 per cent in FY’27, while warning that urgent structural reforms are vital to sustaining growth and job creation—particularly for youth and women.
External pressures eased in FY’25 as the adoption of a market-based exchange rate stabilized reserves, narrowed the current account deficit, and bolstered export performance.
Inflation moderated thanks to tighter monetary policy, reduced import duties on essentials, and strong harvests. However, fiscal pressures intensified as weak tax revenue, subsidies, and higher interest payments pushed up the budget deficit.
Poverty rose between 2023 and 2024, while labor force participation slipped from 60.9 to 58.9 per cent, with women bearing the brunt. Of three million additional working-age people outside the labor force, 2.4 million were women.
“The economy has shown resilience, but this cannot be taken for granted,” said Jean Pesme, World Bank Division Director for Bangladesh and Bhutan. “To secure a strong growth path and more and better jobs, Bangladesh needs bold reforms and faster implementation in areas such as revenue mobilization, banking sector stability, subsidy reduction, urban planning, and investment climate improvement.”
The report also highlights widening regional disparities as industrial jobs remain heavily concentrated in Dhaka and Chattogram, urging a rethinking of spatial development strategies to foster inclusive job creation across the country.
The Bangladesh Development Update accompanies the World Bank’s twice-yearly South Asia Development Update. The October 2025 edition—Jobs, AI, and Trade—forecasts South Asia’s growth at a robust 6.6 per cent this year but warns of a looming slowdown. It emphasizes that AI adoption and greater trade openness could be transformative for job creation and competitiveness across the region.
“South Asia has enormous economic potential and remains the fastest-growing region in the world,” said Johannes Zutt, World Bank Vice President for South Asia. “But countries must proactively address risks by boosting productivity, spurring private investment, and creating jobs for their rapidly expanding workforce.”
BBN/SSR/AD