Bangladesh’s medium-term economic outlook improves: WB

According to the World Bank’s most recent Global Economic Prospects report, Bangladesh’s medium-term economic prognosis has improved, with growth predicted to progressively strengthen over the next two fiscal years.

A better view for the nation has contributed to the outlook’s revision of its projections.

Bangladesh’s economic growth is now predicted by the World Bank to increase to 4.6 percent in FY2025–2026 and then accelerate to 6.1 percent in FY2026–2027.

In addition to predictions of increased investment and industrial activity, the upward revision reflects growing private spending in the face of diminishing inflationary pressures.

The report said reduced political uncertainty following the general election in early 2026 and the anticipated implementation of structural reforms by a new government are expected to support industrial expansion in FY2026/27. 

These factors are also projected to lead to faster public spending and investment growth than previously forecast. 

Compared with the World Bank’s June projections, growth for 2027 has been revised up by 0.3 percentage point, with the improvement largely reflecting an upward revision for Bangladesh and better-than-expected performance in several other economies. 

At the global level, the World Bank said the economy is proving more resilient than earlier anticipated despite persistent trade tensions and policy uncertainty.
 
Global growth is now projected to ease to 2.6 percent in 2026 before edging up to 2.7 percent in 2027. 

About two-thirds of the higher revision to the global growth prediction for 2026 may be attributed to the resilience, which is mostly due to stronger-than-expected growth in major economies, especially the United States.

The 2020s are expected to be the lowest decade for global growth since the 1960s, the Bank warned, if present predictions continue.

According to the research, fast changes in global supply chains and a spike in trade ahead of expected regulatory changes helped sustain global growth in 2025.

As domestic demand declines and trade impetus wanes in 2026, these brief increases are predicted to diminish.

Easing global financial conditions and fiscal expansion in several large economies are expected to help cushion the slowdown. 

Global inflation is projected to decline to 2.6 percent in 2026, reflecting softer labour markets and lower energy prices. 

Growth is expected to pick up again in 2027 as trade flows adjust and policy uncertainty diminishes. 

“With each passing year, the global economy has become less capable of generating growth and seemingly more resilient to policy uncertainty,” said Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President for Development Economics. 

He warned that slower growth combined with record levels of public and private debt could strain public finances and credit markets.
 
Over the coming years, the report said, the world economy is set to grow more slowly than it did in the troubled 1990s, while carrying historically high levels of public and private debt. 

To avert stagnation and rising joblessness, governments in both advanced and emerging economies need to liberalise private investment and trade, rein in public consumption and invest in new technologies and education. 

Growth in developing economies is projected to slow to 4 percent in 2026 from 4.2 percent in 2025, before edging up to 4.1 percent in 2027 as trade tensions ease, commodity prices stabilise and financial conditions improve. 

Low-income countries are expected to record relatively stronger growth, averaging 5.6 percent over 2026–27, supported by firmer domestic demand, recovering exports and moderating inflation. 

Despite this, the World Bank cautioned that per capita income growth in developing economies will remain insufficient to narrow the gap with advanced economies. 

Per capita income growth is projected at 3 percent in 2026—about one percentage point below its 2000–2019 average—leaving developing economies’ per capita incomes at only around 12 percent of those in advanced economies. 

The report also highlighted mounting fiscal pressures in developing economies, where public debt has risen to its highest level in more than half a century. 

A special-focus chapter examined the role of fiscal rules—such as limits on deficits, debt or expenditure—in restoring fiscal credibility and strengthening resilience to shocks. 

“With public debt in emerging and developing economies at its highest level in more than half a century, restoring fiscal credibility has become an urgent priority,” said M Ayhan Kose, the World Bank Group’s Deputy Chief Economist and Director of the Prospects Group.
 
He noted that while well-designed fiscal rules can help stabilise debt and rebuild policy buffers, their effectiveness depends on strong institutions, credible enforcement and sustained political commitment.