Political uncertainty has weakened Bangladesh’s gross domestic product (GDP) growth. It has also reduced domestic demand for goods and services. In addition, the effects of tight fiscal and monetary policies have weighed on the economy.
The Asian Development Bank (ADB) made these observations in its Annual Report 2025, published today, Thursday.
While referring to Nepal as an example, the report remarks that Bangladesh shares a similar political context.
On 10 April, in its Asian Development Outlook (April edition), the ADB projected that GDP growth may reach 4 per cent in the current fiscal year.
The organisation revised this forecast downward primarily due to the conflict in the Middle East.
However, the same outlook also states that political uncertainty has eased following the national election. As a result, the ADB expects economic activity to gain momentum.
What GDP growth means and why it matters
GDP growth measures the percentage increase in a country’s overall economic output compared to the previous year. It serves as one of the principal indicators of a country’s economic health and development.
GDP represents the total monetary value of all goods and services produced within a country over a specific period, usually one year.
An increase in GDP growth generally leads to higher incomes and keeps the economy active. However, in some cases, even when growth rises, living standards or real incomes do not improve at the same pace.
Therefore, the benefits of development must reach marginalised and low-income populations.
Commitment of USD 5.21 billion last year
The ADB’s Annual Report 2025 also provides details of financial commitments made to different countries. In 2025, the ADB committed a total of USD 5.21 billion to Bangladesh.
Of this amount, USD 2.57 billion (257 crore) comprises loans and grants. The remaining funds have been committed through co-financing arrangements with the private sector and other development partners.
Weak banking sector
Regarding the banking sector, the ADB notes that although it remains the backbone of Bangladesh’s financial system, long-standing governance weaknesses, inadequate supervision, and capital shortfalls have hindered its ability to deliver efficient and inclusive services.
As a result, access to credit—particularly for small and medium-sized enterprises—remains limited, and financial inclusion for many households is constrained.
The ADB reports that in 2025 it provided USD 500 million (50 crore) in assistance to Bangladesh. This funding will support strengthening bank supervision, improving governance and asset quality, and modernising liquidity management.
The programme will enhance digitalisation, expand access to affordable finance, accelerate private sector growth, and reinforce the stability of the banking sector.
The ADB has also supported efforts to strengthen and modernise the banking sectors in both Bangladesh and Sri Lanka, improving asset quality, capital adequacy, liquidity, and the regulatory and supervisory capacity of central banks.
In addition, the report states that the ADB is financing improvements in Bangladesh’s transport system.
It is also supporting various programmes aimed at sustaining the livelihoods of forcibly displaced people from Myanmar (the Rohingya), as noted in the report.