The World Bank has lowered Bangladesh's economic growth projection to 3.3 percent in the current fiscal year, down from its previous forecast of 4 percent, citing political unrest and subdued investment.

The forecast by the Washington-based lender is the lowest so far.

Yesterday's projection by the WB comes a day after the International Monetary Fund predicted 3.76 percent growth of Bangladesh's gross domestic product for the current fiscal year ending in June.

The Asian Development Bank earlier projected 3.9 percent growth of GDP for the year.

In its South Asia Development Update released today, the WB attributed the overall deceleration in the first three quarters of FY25 to a sharp decline in private and public investment.

It noted that political violence, curfews, and internet shutdowns severely disrupted economic activity in the first quarter.

Private investment growth is likely to remain constrained through the rest of the year due to global trade disruptions, high input and borrowing costs, and continued domestic policy uncertainty, the WB said.

The report linked the weakening of private investment to sluggish private sector credit growth, which expanded only 7.3 percent year-on-year in December 2024, its slowest pace in three decades.

Public investment is also expected to decline amid reduced capital expenditure, although easing external sector pressures and a narrowing current account deficit have provided some relief, as per the report.

The World Bank forecasts South Asia's GDP growth to slow to 5.8 percent in 2025, 0.4 percentage points lower than its previous estimate, before rebounding to 6.1 percent in 2026.

"Multiple shocks over the past decade have left South Asian countries with limited buffers to withstand an increasingly challenging global environment," said Martin Raiser, World Bank vice president for South Asia.

He called for targeted reforms to address fiscal fragility, underperforming agriculture, and climate vulnerabilities.

Among other countries in the region, India's growth is expected to slow to 6.3 percent in FY26, Pakistan's economy is projected to grow by 3.1 percent in FY26, and Sri Lanka is forecast to grow by 3.1 percent in 2026.