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WB forecasts 3.4% growth, urges reforms
Published : Tuesday, 6 October, 2026 at 3:08 PM
Observer Online Report
Collected Photo
The World Bank has forecasted Bangladesh’s economic growth to remain sluggish at 3.4 per cent for the current 2026-27 fiscal year, urging immediate structural reforms.
Bangladesh's GDP growth will hit 3.4 per cent in the current 2026-27 fiscal year. Energy and financial sector weaknesses, alongside low revenue collection, have kept growth slow since 2023. The World Bank revealed these findings in its latest 'Bangladesh Development Update' published on Tuesday (October 6).
According to the report, investment in the country has dropped and exports have lost momentum. High inflation has reduced purchasing power and raised business costs. However, the external sector remained stable due to improved remittances and foreign exchange reserves. Growth may rise to 3.9 per cent in FY 2027-28 if energy supplies improve and reforms gain traction.
The World Bank noted that poverty and inequality increased during FY 2025-26. Nearly 2.1 million people fell into poverty compared to the previous year. Job growth has stalled, and many women have lost their employment. Defaulted loans surged from 30.6 per cent in December 2025 to 33.2 per cent in June 2026.
Revenue collection stood at 8.3 per cent of GDP, among the lowest in the world. The revenue deficit grew from 3.5 per cent in the previous fiscal year to 3.9 per cent in FY 2025-26.
World Bank Country Director for Bangladesh and Bhutan, Jean Pesme, urged fast and bold reforms in the banking, revenue, and energy sectors to restore private-sector-led inclusive growth. He stressed that now is the time to act to protect the poor and create quality jobs.
The report highlighted that despite subsidies in social protection, energy, and agriculture; nearly half of the poorest households remain outside any safety net. It emphasized implementing a dynamic social registry. Merging multiple food subsidies and targeting cash assistance with family cards could lift 2.85 million people out of poverty.
Meanwhile, the 'South Asia Economic Update' released on the same day projected South Asia's growth at 6.9 per cent in 2026, slowing to 6.7 per cent in 2027.
World Bank Vice President for South Asia, Johannes Zutt, stated that countries must invest in skills, infrastructure, and a supportive environment to capitalize on AI value chains.
World Bank Chief Economist for South Asia, Franziska Ohnsorge, added that AI can boost labor productivity and export potential, but core structural gaps must be resolved first.
-SA
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Published by the Editor on behalf of the Observer Ltd. from Globe Printers, 24/A, New Eskaton Road, Ramna, Dhaka.
Editorial, News and Commercial Offices : Aziz Bhaban (2nd floor), 93, Motijheel C/A, Dhaka-1000.
Phone: PABX- 41053001-06; Advertisement: 41053012; 01793317829, 01550707291, E-mail: [email protected], [email protected] Online: email: [email protected] 41053014; 01550707297 Advertisement: 01550707296
