Bangladesh saw its current account deficit widen sharply in the first quarter of the current fiscal year as growing import far outstrips export with cascading fresh pressure on the external balance.
Current account, a key component of the balance of payments (BoP), recorded a deficit of $1.33 billion during the July-September period of FY27 in a swing from $821 million in the corresponding quarter a year earlier.
The tipping of balance between incomings and outgoings in terms of foreign trade in goods and services is reflected in the latest BoP data prepared by the central bank.
The data show the widening deficit also dragged down the overall balance-of-payments pendulum.
It swung to a deficit of $1.16 billion during the quarter, signifying a growing pressure on the country's external transactions-and hence on its foreign-exchange buffers.
The deterioration came as export earnings grew by only around 7% year on year while import payments expanded over 15% during the period, the data show.
The faster growth in imports, due mainly to price hike of petroleum products amid the Middle East crisis, than exports widened the trade gap.
However, stronger remittance inflows had supported significantly to bridge the gaps.
Remittances inflows from expatriate Bangladeshis grew by 13.3% during the period, helping lower the pressures on the external sector.
Economists warn Bangladesh's widening current account deficit (CAD), driven largely by rising import payments, could build up pressure on the foreign-exchange market and complicate efforts to maintain-exchange rate stability.
They have urged the central bank and policymakers to adopt prudent, market-oriented measures to absorb the external shock, while cautioning against excessive intervention in the currency market or a return to multiple exchange rates.
The widening deficit signals that the country's foreign-currency outflows are increasingly exceeding inflows, raising concerns over the sustainability of the external balance if the trend persists.
Economists say prolonged pressure could lead to further depletion of foreign-exchange reserves, exchange rate volatility and higher import costs, which might heat up domestic inflation.
Dr Zahid Hussain, former lead economist at the World Bank Dhaka office, said that the government should avoid repeating the exchange rate management policies adopted in 2022, when it maintained multiple exchange rates in an attempt to contain pressure on the taka.
Instead, the authorities should allow market-based decisions to guide the exchange rate, avoiding administrative controls and excessive intervention that could undermine market confidence.
The former World Bank economist notes that the current external shock is still manageable, as Bangladesh retained sufficient foreign-exchange reserves to meet its import-payment obligations.
Hussain pointed out that current-account payment increased by around 11% during the July-September quarter, while corresponding inflows grew by approximately 9%, indicating a widening mismatch between foreign-currency earning and spending.
He suggested policymakers should focus on maintaining orderly market conditions rather than attempting to suppress exchange-rate movements through restrictive measures.
Bangladesh’s Balance of Payments (Q1 FY27)
Financial Metric / Indicator | Prior Year (Q1 FY26) Figure | Q1 FY27 Figure | Performance / Change |
Current Account Deficit (CAD) | $821m | $1.33bn | Widened sharply |
Overall Balance of Payments (BoP) | — | Deficit of $1.16bn | Swung into deficit |
Export Earnings Growth | — | 7% | Year-on-year growth |
Import Payments Growth | — | >15% | Year-on-year growth |
Remittance Inflows Growth | — | 13.3% | Year-on-year growth |
Total CAD Inflows Growth | — | ~9% | July–September quarter |
Total CAD Outflows (Payments) Growth | — | ~11% | July–September quarter |