ADB predicts decline in Bangladesh’s GDP growth due to US reciprocal tariff

The Asian Development Bank (ADB) has warned that reciprocal tariffs imposed by the US could impact Bangladesh's gross domestic product (GDP) growth. It said the growth forecast for the newly begun fiscal year (2025–26) has been revised downward, mainly due to a slowdown in the export and industrial sectors, as well as the potential effects of the US tariffs. However, the ADB did not specify a projected growth rate.

This observation came up in the recently published July edition of the Asian Development Outlook by the ADB. The revised edition does not provide country-specific forecasts for GDP growth, inflation, and other indicators. Instead, it offers regional data, including information on major economies, along with an analysis of overall economic trends.

The Asian Development Outlook report published by the ADB last April, projected a 5.1 per cent GDP growth in the 2025–26 fiscal.

Earlier, the US administration announced a 37 per cent reciprocal tariff on Bangladeshi products, which was later revised down to 35 per cent. The new tariff is scheduled to take effect on 1 August. The Bangladesh government is currently in negotiation with the US authorities over the issue.

If implemented, products including ready-made garments will face higher duties when entering the US market. Industry insiders believe this could lead to a significant decline in exports, which would in turn impact the overall economy.

Meanwhile, the July update of the ADB report stated that inflation eased slightly in the last fiscal. This was attributed to stable global commodity prices and tight monetary and fiscal policies. For the same reasons, the inflation projection for FY2026 has been kept unchanged.

The ADB report from last April projected the overall average inflation rate to come down to 8 per cent in the 2025–26 fiscal.

The country is facing a persisting high inflation rate for the last three years. However, inflation has decreased somewhat over the past few months. According to the Bangladesh Bureau of Statistics (BBS), overall inflation fell to 8.48 per cent in June, the lowest since July 2022.

In July 2024, food inflation reached 14.10 per cent, a 13-year high. For the following seven months, food inflation remained above 10 per cent, before dropping below 10 per cent in the subsequent five months.