Moody’s Ratings on Wednesday downgraded Bangladesh’s banking sector rating from stable to negative owing to continued socio-political instability and falling demand for products both home and abroad.

However, the rating agency expects the overall market capitalisation to remain stable.

The economy will grow 4.5% in the current fiscal year ending June 2025, down by 1.3% from the previous fiscal year, the New York-based credit rating agency said.

Financial asset quality will worsen due to persisting civil instability. The broader economic scenario will continue to worsen, Moody’s said.