Political uncertainty has weakened GDP growth: ADB

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News Desk: Political uncertainty has weakened Bangladesh’s gross domestic product (GDP) growth. At the same time, it has reduced domestic demand for goods and services. In addition, the effects of tight fiscal and monetary policies have also impacted the economy.

These observations were made in the Asian Development Bank’s (ADB) Annual Report 2025, published on Thursday (April 23). While citing the example of Nepal, the report also commented that Bangladesh’s political context is similar.

In the Asian Development Outlook (April edition) published on April 10, ADB stated that GDP growth for the current fiscal year may be around 4 percent. The forecast has mainly been lowered due to the ongoing conflict in the Middle East.

However, the outlook also notes that political uncertainty has decreased following the national election. As a result, the organization expects economic activities to gain momentum.

What is GDP growth and why does it matter?

GDP growth measures how much a country’s overall economic output or size has increased compared to the previous year, expressed as a percentage. It is one of the key indicators of a country’s economic health and development.

GDP represents the total monetary value of all goods and services produced within a country over a specific period (usually one year).

When GDP growth increases, people’s incomes generally rise and the economy remains active. However, higher growth does not always translate into improved living standards or real income for everyone. Therefore, the benefits of development must reach disadvantaged groups, particularly the poor.

$5.21 billion in commitments last year

The ADB Annual Report 2025 provides details on financial commitments made to different countries. In 2025, Bangladesh received a total commitment of $5.21 billion from ADB. Of this, $2.57 billion consists of loans and grants, while the remaining amount was committed through co-financing with the private sector and other donor agencies.

Weak banking sector

According to ADB, although the banking sector is the backbone of Bangladesh’s financial system, long-standing governance weaknesses, inadequate supervision, and capital shortages have hindered the delivery of efficient and inclusive services. As a result, access to credit—especially for small and medium enterprises (SMEs)—remains limited, and financial inclusion for many households is constrained.

ADB also noted that in 2025, it provided $500 million in support to Bangladesh. This funding will be used to strengthen banking supervision, improve governance and asset quality, and modernize liquidity management. The program is expected to boost digitalization, expand access to affordable financing, accelerate private sector growth, and enhance the stability of the banking sector.

ADB has also supported efforts to strengthen and modernize the banking sectors in both Bangladesh and Sri Lanka. These initiatives aim to improve asset quality, capital liquidity, and the regulatory and supervisory capacity of central banks.

In addition, the report states that ADB is financing improvements in the country’s transport system. It is also supporting various programs to maintain the living standards of forcibly displaced people (Rohingya) from Myanmar.