The International Monetary Fund (IMF) has further cut Bangladesh's growth forecast, but kept its projection on inflation elevated for the current fiscal year.

The South Asian economy may grow 3.8 percent in 2024-25 fiscal year, down from 4.5 percent the multilateral lender projected in early October, because of output losses caused by the July public uprising, floods, and tighter policies.

IMF's latest projection is lower than Bangladesh's 4 percent growth in gross domestic product (GDP) the World Bank predicted in October.

As per the prediction by the two multilateral agencies, the FY25 economic growth of the country would be the lowest since FY20 when the Covid-19 pandemic wreaked havoc on the world.

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IMF slashes growth forecast to 4.5 percent

The IMF said Bangladesh's GDP growth may rebound to 6.7 percent in FY26 as policies relax, according to a statement issued today after the end of a two-week Bangladesh visit of a team of the IMF staff.

The mission visited Dhaka to discuss economic and financial policies to review the conditions it attached with the $4.7 billion loan it approved for Bangladesh in January 2023.

This was the second time this year the IMF cut Bangladesh's economic growth forecast but projected a rise in consumer prices since July this year.

In July, the agency said Bangladesh's GDP may expand by 6.6 percent and inflation might be 6.1 percent in the current fiscal year, which will end in June next year.

In October, the IMF hiked inflation forecast for Bangladesh and today said the annual average inflation is anticipated to remain around 11 percent in FY2025 before declining to 5 percent in FY2026 thanks to tighter policies and easing supply pressures.

"However, the outlook remains highly uncertain, with risks skewed to the downside," said the IMF.

The projection comes nearly a week after Bangladesh Bank Governor Ahsan H Mansur said the interim government has set a target to bring down consumer prices hike to 7 percent by the end of next June, which some analysts doubted since inflation stayed stubbornly high.

Inflation hit a four-month high of 11.38 percent in November, while food inflation soared to 13.80 percent from 12.66 percent in October, according to data from the Bangladesh Bureau of Statistics.

The 12-month average inflation stood at 10.22 percent in November, up from 10.05 percent in October.