Bangladesh's economy may grow at a rate of around 4 to 5 percent in the 2024-25 fiscal year (FY), but it is expected to bounce back to 6 percent or above the following year as the political situation stabilises, uncertainty decreases, and policies become more proactive, the central bank said today.

"The growth outlook for the second half of FY25 for Bangladesh does not appear optimistic due to the existing challenges," Bangladesh Bank (BB) stated while unveiling the monetary policy at its headquarters for the second half of the fiscal year ending in June.

"Despite the modest slowdown in economic activity, the projected growth should be viewed as remarkable given the numerous challenges facing the economy," it added.

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BB keeps policy rate unchanged as inflation begins to ease

The BB shared its projection on the country's GDP growth at a time when the government is considering revising its target to 5.25 percent for the current fiscal year due to the damage caused by multiple floods and the interim government's contractionary monetary policy aimed at containing high inflation.

Last month, the World Bank forecasted 4.1 percent growth in FY25, citing subdued investment and industrial activity amid heightened political uncertainty.

A month earlier, the International Monetary Fund predicted a 3.8 percent economic growth for the ongoing fiscal year, citing output losses caused by the July uprising, floods, and tighter policies.

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Economy poised to encounter substantial hurdles in H2 of FY25: BB

The BB, in its monetary policy for the January-June period of 2025, stated that remittances from workers abroad, strong growth in readymade garment exports, and increased domestic demand from the two upcoming religious festivals are expected to provide support to the economy.

Yet, it will be difficult to regain growth momentum in the near term since the government is focused on improving fiscal discipline and the central bank is working to control inflation.

The BB stated that economic growth should bounce back in FY26, beginning in July.

The economy of the South Asian nation grew by 4.22 percent in FY24, the lowest in four years, marking the second consecutive year of deceleration due to weak consumption and exports.