IMF cuts Bangladesh’s FY27 growth forecast to 3.2%

The International Monetary Fund (IMF) has cut its forecast for Bangladesh’s economic growth to 3.2% for fiscal year 2027, down from the 4.3% projected in April.

In its latest World Economic Outlook report, released on Tuesday, the IMF said the global economy was once again proving resilient, “but unevenly so”.

The report identified two major transformative forces — geopolitics and technology — as reshaping the global economy.

“Geopolitics has its latest and most acute manifestation in the war in the Middle East, while hostilities in other regions and tensions in international trade relations continue to cast a shadow on economic activity. The negative supply shock from the war is working its way through the economy through higher and more volatile energy prices and their impact on inflation dynamics,” it said.

On technology, the IMF said the trend was most recently playing out as a positive demand shock, driven by investment in artificial intelligence (AI) and related hardware and infrastructure.

“Trade flows show this most strikingly. Whether this positive demand shock will transform into a positive supply shock in the long term by delivering faster productivity growth remains to be seen,” it added.

Bangladesh’s GDP growth stood at 3.6% in FY26, compared with 3.5% in FY25, the lender said.

The IMF’s regional outlook for FY27 shows wide disparities in growth and inflation across South Asia. India is projected to lead the region with GDP growth of 7% and inflation of 4.4%, while Bhutan is expected to grow by 6.9%, with inflation at 6.5%.

“Several Southeast Asian economies are projected to benefit from data centre activity and the upturn in the global technology cycle and, in some cases, from emergency fiscal measures,” the report said.

With energy emerging as a central factor in the economic outlook, the report projected that the Strait of Hormuz would reopen in March 2027.

The report said effective policy responses to energy-related shocks require identifying the sources of energy price movements in real time.

“Policymakers’ task is further complicated by the fact that shocks usually arise simultaneously. Recent events in the Middle East show that energy prices often increase in anticipation of supply disruptions and that geopolitical risk continues to influence prices even when shortages have already occurred. As a result, interpreting higher energy prices solely as evidence of physical scarcity can lead to inappropriate policy responses,” it said.

Myanmar is projected to record the lowest growth in South Asia, at 2%.

Meanwhile, the World Bank also cut its growth forecasts for Bangladesh for both FY26 and FY27 to 3.4% earlier this month.