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The World Bank has revised Bangladesh’s economic growth projection for the fiscal year 2024-25, lowering it to 4%, down from an earlier estimate of 5.2%. This adjustment comes in response to the political unrest that has shaken the country, creating significant economic and political uncertainty.
In its South Asia Development Update for October 2024, the World Bank emphasized how the political turmoil of July and August has disrupted the nation’s economic performance, directly impacting its gross domestic product (GDP) growth. Supply chain disruptions and investor hesitancy have further contributed to the economic slowdown.
The Asian Development Bank (ADB) also recently cut its growth forecast for Bangladesh, revising it to 5.1% for the current fiscal year. The ADB cited similar concerns, noting that the political unrest over the past few months has created challenges for Bangladesh’s supply chains, adding pressure to its economic outlook.
Bangladesh and the Maldives stand out as the only two South Asian countries where the World Bank has downgraded growth forecasts. This reflects the unique political and economic hurdles facing both nations. Inflationary pressures are also expected to rise, while the broader South Asian region shows more positive economic trends.
Recovery Potential
Despite these setbacks, the World Bank remains cautiously optimistic about Bangladesh’s long-term economic prospects. The global lender foresees a gradual recovery, underpinned by key reforms in the financial sector, improved business conditions, expanded trade, and greater domestic resource mobilization.
The recent political changes in Bangladesh, including the resignation of Prime Minister Sheikh Hasina and the appointment of an interim government following student-led protests in August, have further added to the country’s economic uncertainty. However, the World Bank’s projections for 2025-26 suggest that Bangladesh has the potential to rebound and achieve strong growth in the coming years.
While the near-term outlook for Bangladesh is clouded by political instability, the World Bank believes that with the right reforms, the nation can bounce back. Implementing structural changes in the financial sector, boosting investment, and strengthening domestic industries will be critical to ensuring long-term growth and stability.
