Bangladesh’s medium-term economic outlook has improved, with growth expected to strengthen steadily over the next two fiscal years, according to the World Bank’s latest Global Economic Prospects report.

The report revised up its projections for Bangladesh, forecasting economic growth of 4.6 percent in FY25-26, rising further to 6.1 percent in FY26-27.

The upward revision reflects strengthening private consumption amid easing inflationary pressures, alongside expectations of higher industrial activity and investment.

Reduced political uncertainty following the general election and anticipated structural reforms by the new government are also expected to support industrial expansion and faster public spending, said the report.

Compared with the World Bank’s June projections, growth for FY 26-27 has been revised up by 0.3 percentage points, driven largely by Bangladesh and better-than-expected performance in several other economies.

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At the global level, the World Bank noted that the economy is proving more resilient than previously anticipated despite trade tensions and policy uncertainties.

Global growth is projected to ease to 2.6 percent in 2026, before edging up to 2.7 percent in 2027, largely due to stronger than expected growth in major economies, particularly the United States.

However, it warned that the 2020s could become the weakest decade for global growth since the 1960s if current trends persist.

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

Indermit Gill, World Bank Group’s Chief Economist, said slower growth combined with record public and private debt levels could strain finances and credit markets.

The report emphasised the need for governments to liberalise investment and trade, rein in public consumption, and invest in technology and education to avoid stagnation and rising unemployment.

Growth in developing economies is projected to slow slightly to 4 percent in 2026 from 4.2 percent in 2025, before picking up to 4.1 percent in 2027.

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

Despite this, per capita income growth in developing economies will remain insufficient to narrow the gap with advanced economies, projected at just 3 percent in 2026, about one percentage point below the 2000–2019 average.

The report also highlighted rising fiscal pressures in developing countries, with public debt reaching its highest level in more than 50 years.

M Ayhan Kose, Deputy Chief Economist of the World Bank, said restoring fiscal credibility through well-designed fiscal rules is crucial but requires strong institutions, credible enforcement, and sustained political commitment.