New Delhi, July 29 (IANS) Bangladesh’s economic growth and external balance sheet position could weaken further, a new report has said, citing ratings S&P Global long‑term outlook on the country shifting to negative from stable.
The report from Bangladesh-based The Daily Star said the ratings agency downgraded its outlook, citing persistent weaknesses in the banking sector and rising external risks from volatile energy and trade conditions.
“We revised the outlook to negative due to the increasing risks to Bangladesh’s economy posed by a weak domestic banking sector, fiscal constraints, external headwinds, and the growing prospect of a more protracted recovery,” S&P said in its report.
The ratings agency warned that administrative and institutional weaknesses and limited revenue‑raising capacity left the government with limited fiscal flexibility.
It noted the economy’s modest per capita and the government’s elevated interest burden as additional headwinds for the economy that prompted ratings downgrade.
Continued stability in Bangladesh’s external accounts would hinge on sustained remittances, a rebound in the readymade garment sector and continued engagement with multilateral lenders.
Adverse conditions affecting Bangladesh’s recovery include “the war in the Middle East, financial sector imbalances, and energy market vulnerabilities”, the report said.
Bangladesh’s ratings could be lowered further if its long-term trend growth rate declines to levels more in line with those of peers with similar average incomes.
“It could also lower the ratings if Bangladesh’s external position deteriorates, such that, for example, narrow net external debt exceeds 100 per cent of current account receipts on a sustained basis,” the report said, citing the agency.
Bangladesh’s economy has slowed sharply over the past three years, and annual economic growth is expected to average around 4.5 per cent over the next three years, the report added.
Bangladesh’s economic growth slowed sharply in the third quarter of FY26, with GDP expansion at 2.22 per cent, down from 4.53 per cent in the corresponding period in previous year, another recent report said.
Slowdown was driven largely by a contraction in the industrial sector, which recorded -0.28 per cent growth, compared with 3.33 per cent a year earlier.
—IANS
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