ADB warns inflation may rise to 9pc

But inflation could rise to nine per cent, posing a major challenge to the country’s economic outlook, according to the Asian Development Bank (ADB).

The projections were released on Wednesday in the ADB’s latest Asian Development Outlook (ADO) September 2026.

The ADB forecast Bangladesh’s economic growth to increase from 3.5 per cent in FY2024-25 to 3.7 per cent in FY2025-26, before reaching four per cent in FY2026-27. the development of the co

The development lender said economic activity slowed somewhat in the final quarter of FY2025-26 because of supply disruptions stemming from conflicts in the Middle East, although the impact is expected to remain limited.

Stronger consumption and investment are expected to support the recovery, as political uncertainty eased following the general election held earlier in 2026, the ADB said.

“Bangladesh’s economy is beginning to recover, but the recovery remains vulnerable to external shocks and domestic constraints,” said ADB Country Director Chingfeng Zhang.

He said this was a critical time to accelerate reforms in macroeconomic management, the financial sector, energy security and the business environment.

Such reforms are essential to boost private investment, create quality jobs and put Bangladesh on a stronger, more inclusive and resilient growth path, Zhang said.

He added that the ADB was ready to support Bangladesh in translating these reforms into tangible outcomes for the people.

Inflation remains a key concern

The ADB expects inflation to decline from 10 percent in FY2024-25 to an estimated 8.7 percent in FY2025-26, but sees it rising again to 9 percent in FY2026-27.

The report attributed the inflation risks to energy shortages, elevated production and transportation costs, potential disruptions to shipping, delayed effects of El Niño on food prices and a gradual easing of monetary policy.

The current account deficit is also projected to widen to 0.6 percent of GDP in FY2026-27, from an estimated 0.3 percent in FY2025-26, as imports are expected to grow faster than exports.

Despite continued tensions in the Middle East, remittance inflows are expected to remain stable, the ADB said. Strong remittances and adequate foreign exchange reserves should help maintain external stability, although sustaining that stability will depend on sufficient trade restrictions, slower growth in major export markets, continued pressure on the exchange rate, further banking-sector stress, delays in fiscal reforms financial inflows, exchange-rate flexibility and prudent macroeconomic management.

Services, agriculture to support growth

The services and agriculture sectors are expected to contribute to growth in FY2026-27. However, industry and investment may remain constrained by high borrowing costs, limited access to credit, energy shortages, weak external demand and other structural challenges.

Remittance-supported private consumption is expected to remain a key driver of growth, although elevated inflation will continue to erode household purchasing power.

The ADB also identified significant downside risks to its economic projections.

A prolonged conflict in the Middle East, higher oil prices, further disruptions to global shipping, tighter trade restrictions, slower growth in major export markets, continued pressure on the exchange rate, further banking-sector stress, delays in fiscal reforms, lower-than-expected development spending and climate-related shocks could weaken growth and keep inflation elevated, the report warned.

Established in 1966, the Asian Development Bank is a multilateral development bank focused on sustainable, inclusive and resilient growth in the Asia-Pacific region. It is owned by 69 members, 50 of them from the region.