The interim government has backtracked from the previous administration's ambitious macro-economic targets as it is expecting 5.50 percent economic growth in the next fiscal year.

It has also revised down the current fiscal year's gross domestic product (GDP) growth target to 5.0 percent from the earlier 6.75 percent.

The ousted Sheikh Hasina government took an ambitious 6.75 percent economic growth target for FY25 despite the internal and external headwinds in the macro-economy.

The interim government has also set a realistic target of 6.0 percent GDP growth in the medium term for FY27.

Finance Adviser Dr Salehuddin Ahmed in his FY26 national budget speech on Monday said the GDP growth rate may be slightly lower due to the fight against inflation.

"According to provisional estimates, GDP growth in FY25 could be 3.97 percent. However, we expect the final estimate to be higher. We also expect that the growth rate will rise to 6.5 percent in the medium term in FY28," he added.

Meanwhile, Bangladesh's economy has been estimated to grow at 3.97 percent in the outgoing FY25 against the revised target of 5.0 percent, the latest provisional data from the Bangladesh Bureau of Statistics (BBS) showed.

According to the 2023 GDP estimation, Bangladesh is the 33rd largest economy in the world.

The FY26 budget has been formulated with a view to accelerating economic growth in order to prepare for graduation from the least developed country (LDC) status, thus reaching the upper-middle income category by creating new jobs, sustaining GDP growth, promoting local industries, increasing investment through protection and trade facilitation, developing export-oriented and heavy industrial enterprises, and promoting the Made in Bangladesh concept.

According to provisional estimations, Bangladesh's GDP size is Tk 55.527 trillion or $462 billion in the current fiscal year.

The government in its medium-term macroeconomic framework says the GDP is expected to reach $487 billion in FY26 with 5.50 percent expansion.

Meanwhile, the estimated GDP growth has been marked as the lowest in several years, raising concerns among economists and policymakers.

The BBS provisional data revealed modest growth across key sectors - agriculture by 1.79 percent, industry 4.34 percent, and services 4.51 percent in FY25.

While these figures reflect some activities, they fall far short of the government's initial ambitious target of 6.75 percent and even the revised target of 5.25 percent GDP growth for the current fiscal year.

This downward revision aligns with earlier projections from international bodies. The International Monetary Fund (IMF) had adjusted its forecast to 3.76 percent for FY25, the Asian Development Bank (ADB) 3.9 percent, and the World Bank (WB) 3.3 percent.

Although the GDP expanded at a slower rate, per capita income rose to $2,820 in FY25 from $2,738 in the previous fiscal year, the provisional data shows.