July trade deficit jumps 38pc

Bangladesh’s trade deficit widened sharply in July as faster growth in imports coincided with a fall in exports, putting renewed pressure on the country’s external balance at the start of the new fiscal year.

The trade gap rose 38.36 percent year-on-year to $2.08 billion in July, the first month of FY2026-27, from $1.50 billion in the same month a year earlier, according to Bangladesh Bank data.

Import payments increased 8.6 percent to $6.44 billion, while export earnings declined 1.6 percent to $4.35 billion.

Petroleum imports were a major contributor to the increase, with spending on petroleum goods surging 83.3 percent year-on-year to $1.37 billion in July.

Industry insiders attributed the rise in import payments partly to higher global oil prices, which they said had increased following the US-Israel war with Iran.

The widening trade gap was accompanied by a deterioration in the current account balance, which fell to $66 million in July from $125 million in the corresponding month of the previous fiscal year.

The current account in the balance of payments (BoP) records a country’s net transactions in goods, services, income and transfers with the rest of the world.

In contrast, the financial account deficit narrowed during the month. It stood at $677 million in July, compared with $746 million a year earlier.

The financial account covers claims and liabilities involving non-residents and includes foreign direct investment (FDI), medium- and long-term loans, trade credit, net aid flows, portfolio investment and reserve assets.

Net FDI, however, declined to $116 million in July from $122 million in the same month of the previous fiscal year.

Despite the improvement in the financial account deficit, Bangladesh’s overall external balance deficit widened to $633 million in July from $545 million a year earlier, Bangladesh Bank data showed.