Inflation projected at 10.9% in IMF outlook

The International Monetary Fund (IMF) has downgraded Bangladesh’s growth forecast for the 2026-27 fiscal year to 3.2%, from 3.5% previously, while raising its average inflation projection to 10.9%, signalling mounting pressure on the country’s fragile economic recovery.

Published in the October 2026 World Economic Outlook on Tuesday, the projections point to a combination of sluggish growth and elevated prices that threatens household purchasing power and business activity. The outlook comes against a backdrop of persistent structural weaknesses, including a fragile banking sector, subdued investment, inadequate revenue collection and energy supply constraints. Meanwhile, point-to-point inflation stood at 8.34% in September, outpacing wage growth of 7.90% and thereby eroding workers’ real incomes. The World Bank, for its part, has projected growth of 3.4% for FY2026-27, while cautioning that rising poverty, weak job creation and financial-sector vulnerabilities continue to weigh on the country’s prospects.

To revive growth and restore stability, economists and development partners have stressed the need for banking-sector reforms, stronger revenue mobilisation, reliable energy supplies and a more conducive investment climate. Furthermore, better targeting of social protection programmes could help shield vulnerable households from persistent inflation.

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Although improved energy supplies and accelerated reforms could underpin a recovery in the coming years, sustained progress will ultimately hinge on effective policy implementation, higher investment and stronger employment generation.