The Asian Development Bank (ADB) has revised its economic growth projection for Bangladesh, lowering it to 5.1 percent for the current fiscal year 2024-25. The reduction comes in the wake of supply chain disruptions caused by political unrest in July and August 2024 and recent floods that have further strained the country’s economy.

The Manila-based lender had previously projected a 6.6 percent growth rate for Bangladesh, reflecting optimism about the country’s production of goods and services.

The ADB report highlights that fiscal and monetary policies are likely to remain restrictive, affecting both consumption and investment. The bank notes that these policies, while essential for managing inflation and maintaining economic stability, could limit domestic demand.

“Fiscal and monetary policies are expected to remain tight, further dampening consumption and investment demand,” the ADB said in its statement.

The multilateral lender also stressed that the overall economic forecast is highly uncertain, with significant downside risks clouding the macroeconomic landscape. According to the ADB, these risks are primarily tied to political instability, a fragile law-and-order situation, and persistent vulnerabilities within Bangladesh’s financial sector.

The ADB’s revised forecast is lower than the World Bank’s June 2024 projection, which estimated Bangladesh’s economic growth at 5.7 percent for FY2025. The World Bank had pointed to a potential rise in private consumption, buoyed by easing inflation, and an uptick in investment linked to large infrastructure projects as key economic drivers.

However, the ADB’s outlook reflects a more cautious stance, especially given the challenges of recent political unrest and natural disasters.