Government Cuts FY25 GDP Growth Forecast to 5.25%

Bangladesh's upcoming national budget for FY 2025-26 is likely to be Tk 7.92 trillion, slightly lower than the current year's Tk 7.97 trillion, marking the first time the country will frame a smaller budget year-on-year. This downsizing reflects poor revenue performance, foreign aid shortfalls, and sluggish budget implementation.

The Asian Development Bank (ADB) revised Bangladesh's GDP growth forecast for FY2025 to 3.9%, down from 4.3%, citing four key risks: US tariffs, political uncertainty, high inflation, and natural disasters. Inflation is projected to average 10.2% in FY2025, easing to 8% in FY2026.

The government has proposed a Tk 8,00,000 crore budget for FY 2025-26, targeting 6% GDP growth and 6.5% inflation. The development budget is projected between Tk 2,30,000 crore and Tk 2,40,000 crore, with a revenue target of Tk 5,85,000 crore.

The interim government of Bangladesh is planning a smaller budget for fiscal year 2025-26, with a 6% GDP growth target due to the sluggish economy and low revenue collection. Pre-budgetary meetings with stakeholders, including economists, business leaders, and economic reporters, will begin next week under Finance Adviser Salehuddin Ahmed.

Unpaid household labor, predominantly carried out by women, remains excluded from GDP calculations despite its immense economic value. Women in Bangladesh spend seven times more time on unpaid labor than men, dedicating 24.5% of their daily hours to household and caregiving tasks.

Bangladesh has one of the lowest tax-to-GDP ratios globally, even lower than Nepal and war-torn countries like Afghanistan and Pakistan. In 2023, Bangladesh’s tax-to-GDP ratio was 8.21%, ranking as the fourth lowest worldwide, with only Sudan, Yemen, and Haiti having lower figures.