Overview
- Recent floods are expected to keep growth at 3% in FY26 after a 3% expansion in FY25, with any pickup to 3.4% in FY27 contingent on macro stability and reforms.
- Crop losses in rice, sugarcane, cotton and maize are weighing on agriculture, with cotton shortfalls set to hit textiles, wholesale trade and transport.
- Food‑supply shocks are forecast to lift inflation to an average 7.2% in FY26 before easing to 6.8% in FY27 as supply constraints resolve.
- Poverty is estimated at 22.2% in FY25 and projected at 21.5% in FY26, figures the Bank stresses are simulations based on 2019 consumption data pending new survey results.
- Fiscal tightening and monetary discipline helped anchor inflation and deliver current account and primary surpluses, yet the fiscal deficit is projected at 5.4% in FY26 as reconstruction needs rise, with exports stuck near 10% of GDP versus ~16% in the 1990s and reforms urged on exchange rate, tariffs, trade finance and logistics.