Bangladesh’s growth forecasts are close to half the government’s target as weak banks constrain credit and investment. The outlook contrasts with Prime Minister Tarique Rahman’s October 27 pitch in Tokyo that GDP could exceed one trillion dollars by 2034. Remittances support the broader external accounts, but do not reduce the goods trade deficit itself.
Story in brief
- The World Bank estimates growth at 3.4 percent in the last fiscal year and forecasts the same rate in 2026-27. The IMF forecasts 3.2 percent, against the government’s 6.5 percent target, and average inflation of 10.9 percent.
- The banking system is the acute crisis. Non-performing loans reached 33.2 percent of all lending by June, and the system’s capital adequacy ratio was negative 2.6 percent in December 2025, against a regulatory minimum of 10 percent. Private-sector credit growth fell to 4.5 percent in June, a 33-year low.
- Restructuring the banks will require nearly 10 percent of GDP, about Tk 6 lakh crore, the Asian Age report estimates. The budget allocated Tk 40,000 crore, one fifteenth of that figure.
- Imports rose 8.6 percent in July while exports reached $4.35 billion, leaving a goods trade deficit of $2.09 billion in the fiscal year’s first month. Remittances help finance external payments; they are not export earnings or a reduction in that trade deficit.
Forecasts below the growth target
The lenders’ outlooks differ in depth. The World Bank’s October update estimates 3.4 percent growth in fiscal 2025-26 and forecasts the same rate in 2026-27, with a recovery to 3.9 percent the following year. Those are the Bank’s estimates and projections, not interchangeable with final national accounts. The IMF forecast reported in October puts 2026-27 growth at 3.2 percent and average inflation at 10.9 percent. The Asian Development Bank’s September forecast was about 4 percent. The government’s targets are 6.5 percent growth and 7.5 percent inflation.
The IMF’s reported path falls to 2.2 percent in fiscal 2027-28 before recovering to around 3 percent by 2030-31. September’s inflation reading was 8.34 percent on the Bureau of Statistics’ count. A monthly year-on-year reading and a full-year average forecast cover different periods; the latter does not predict a steady increase every month. The World Bank also reports rising poverty and weaker household purchasing power.
Banking crisis
The banking sector is the most acute risk in the Asian Age account, which cites Bangladesh Bank’s Financial Stability Report. The World Bank figures reported by The Business Standard put the system’s capital adequacy ratio at negative 2.6 percent in December 2025, against a regulatory minimum of 10 percent. Stricter disclosure aligned with international standards revealed the scale of bad lending. The systemwide non-performing loan ratio reached 33.2 percent in June 2026, compared with 20.2 percent in December 2024. Ratios differ across bank groups: 58.9 percent at Islamic banks and 43.2 percent at state-owned commercial banks.
The central bank has been carrying the weakest institutions. By June, Bangladesh Bank had provided Tk 760 billion, about $6.2 billion, in uncollateralised liquidity support to weak banks. The World Bank warned that continued forbearance and repeated support could delay the repair of balance sheets and undermine confidence in the system.
The report estimates bank restructuring could require nearly 10 percent of GDP, about Tk 6 lakh crore. The fiscal 2026-27 budget allocated Tk 40,000 crore for weak banks and financial institutions, one fifteenth of that estimate. The comparison does not establish that the entire restructuring cost must be paid from one year’s budget. Private-sector credit growth fell to 6.03 percent in January 2026 and to 4.5 percent by June, a 33-year low, limiting finance for firms and investment.
Trade gap and the remittance cushion
Bangladesh Bank data cited in the report put July imports at $6.44 billion, up 8.6 percent year on year, and exports at $4.35 billion. The difference is a $2.09 billion goods trade deficit. Remittances are recorded elsewhere in the balance of payments; they can offset pressure on the current account and foreign-exchange supply without changing that goods deficit. The World Bank’s update describes strong remittances and improving reserves as sources of external resilience.
The projected Japanese private investment and the prime minister’s GDP ambition are future possibilities, not current receipts. Bank restructuring, energy supply and access to credit will affect firms’ ability to invest. A private-investment projection over five years cannot be compared directly with the annual growth rate or treated as money already available to repair bank balance sheets.
What happens next
The next evidence will come from lending, inflation and investment data, and from a funded plan for resolving weak banks. The next IMF programme review will also clarify policy commitments. Bangladesh is scheduled for LDC graduation on November 24, with an extension request under consideration; trade-preference transitions depend on individual markets and cannot all be assigned that date.
বাংলায় মূল প্রতিবেদন পড়ুন · Read the original Bengali report