Trade deficit hits $13.8b as exports falter, imports rise
Bangladesh’s trade deficit widened to $13.8 billion in the first seven months of the current fiscal year (July–January 2025-26) as exports stagnated and imports continued to rise, according to the latest data from Bangladesh Bank.
This represents an increase of over $2 billion compared with $11.75 billion in the same period last year.
The figures, however, do not yet reflect the potential effects of the ongoing US-Israel conflict with Iran, which began on 28 February.
Export earnings fell slightly to $26.09 billion, down from $26.37 billion a year earlier, while imports rose to $39.89 billion from $38.11 billion.
Zahid Hussain, former lead economist at the World Bank Dhaka office, noted that “the rising trade deficit is primarily driven by higher imports and lower exports.”
Despite the widening trade gap, the current account deficit improved significantly, narrowing to $381 million from $1.35 billion during the same period last year.
Analysts attribute this improvement largely to strong remittance inflows, which reached $19.43 billion, up from $15.96 billion previously.
“Strong remittance inflows helped reduce the current account deficit, even as trade deficit increased,” Zahid Hussain added.
The current account, a key component of the balance of payments, accounts for net trade in goods and services, income from abroad, and transfers such as remittances.
The financial account also recorded a substantial surplus of $2 billion, compared with $331 million last year.
Economists point to a turnaround in trade credit and higher net foreign aid as key factors.
Trade credit, which finances imports by deferring payments, contributed a surplus of $1.05 billion after a deficit of $1.29 billion in the previous year.
“The financial account surplus rose despite a decline in MLT loan disbursements, thanks to the major turnaround in trade credit,” Zahid said.
Overall, Bangladesh’s balance of payments improved, posting a surplus of $2.28 billion, compared with a deficit of $1.22 billion last year.
“The first seven months show comfort in the overall BoP, supported by strong remittances,” Zahid noted.
However, the ongoing Iran-Israel conflict may create challenges for Bangladesh’s external sector in the coming months.
The exchange rate has already shown volatility, with the dollar rising more than Tk0.70 in a week to around Tk123.
“The BoP situation may worsen as the war’s impact emerges from March onwards, posing challenges for exchange rate management. Bangladesh Bank will need to carefully manage reserves and stabilize the currency,” Zahid warned.
This analysis highlights that while remittances and financial inflows are helping cushion the economy, rising imports and stagnant exports, combined with global uncertainties, could strain Bangladesh’s external sector in the near future.
