Economy under pressure amid political uncertainty: ADB Report

Bangladesh’s economy is currently facing significant pressure as political uncertainty, tight policy measures, and global instability combine to slow growth, according to the Asian Development Outlook 2025 released by the Asian Development Bank (ADB) on Thursday.

The report notes that uncertainty in the political landscape has not only weakened GDP growth but also reduced domestic demand for goods and services. This has been further compounded by restrictive fiscal and monetary policies, which have added negative pressure to overall economic activity.

ADB observed similarities between Bangladesh’s political situation and that of Nepal, highlighting that instability is a common risk for developing economies, directly affecting investment, production, and consumer confidence.

Earlier, in its April 10 outlook, ADB projected Bangladesh’s GDP growth to fall to 4 percent in the current fiscal year. The ongoing conflict in the Middle East has been identified as a key factor behind this slowdown, as global uncertainty, volatile fuel and commodity prices, and disruptions in trade flows continue to impact import-dependent economies like Bangladesh.

However, the report does not present an entirely pessimistic outlook. ADB believes that political uncertainty has eased somewhat following the national election, which could gradually help restore economic momentum. Improved investor confidence and market stability may support a rebound in growth.

Explaining GDP, the report describes it as a measure of a country’s total economic output—the combined value of all goods and services produced within a specific period. While higher growth generally leads to increased income and job creation, ADB cautioned that the benefits are not always evenly distributed, potentially widening income inequality if inclusive growth is not ensured.

ADB has pledged a total of $5.21 billion in assistance to Bangladesh for 2025. Of this, $2.57 billion will be provided as loans and grants, while the remainder will come through co-financing with the private sector and development partners. This support is expected to play a key role in infrastructure development, financial sector reforms, and social protection initiatives.

The report also raises concerns about the banking sector, citing long-standing issues such as weak governance, inadequate supervision, and capital shortages. These challenges have limited access to credit, particularly for small and medium enterprises, and left many households outside the formal financial system—posing a major obstacle to inclusive economic growth.

To address these issues, ADB has introduced a $500 million support programme for 2025 aimed at strengthening bank supervision, improving asset quality, and modernising liquidity management. The initiative also seeks to expand digital banking, increase access to affordable financing, and accelerate private sector growth.