The country’s external trade is coming under renewed pressure as exports continue a downward trend while import costs rise steadily due to high prices of fuel and essential commodities, raising concerns over mounting pressure on foreign exchange reserves.
According to the latest data from the Export Promotion Bureau (EPB), merchandise exports have remained in negative territory in recent months of the current fiscal year, with a particularly sharp decline recorded in March.
At the same time, higher global prices of fuel and food items are pushing up import bills. Ongoing conflict in the Middle East has created uncertainty in global fuel supply, driving up oil prices and increasing Bangladesh’s demand for foreign currency as it imports fuel at elevated costs.
Trade deficit widens sharply
In the first eight months of fiscal year 2025–26, the country’s merchandise trade deficit has widened significantly. Central bank data shows that while export earnings are declining, import expenditure is rising. The gap between imports and exports has now reached nearly $17 billion, equivalent to more than Tk 200,000 crore.
Despite the widening deficit, the overall external position remains relatively stable due to strong remittance inflows, which have helped keep the current account deficit under control.
This picture emerges from the latest Balance of Payments (BoP) statistics published by Bangladesh Bank.
Exports continue to fall
The ongoing war in the Middle East has disrupted global fuel supply chains and pushed up international energy prices, adding further strain on Bangladesh’s foreign exchange reserves.
The pressure comes at a time when exports have been declining for several consecutive months. The steepest fall was recorded in March, when exports dropped by about 18% year-on-year.
According to EPB data, exports stood at $3.48 billion in March, down 18.7% from $4.2486 billion a year earlier. However, preliminary figures from the National Board of Revenue (NBR) placed exports at $3.396 billion.
The March decline was driven primarily by weak performance across key sectors, including ready-made garments, leather and leather goods, processed agricultural products, home textiles, and jute and jute goods. A similar trend was observed across several small and medium export sectors.
EPB data show that in the July–March period of FY2025–26, total exports stood at $35.3865 billion, down 4.85% from the same period a year earlier. Although exports posted a strong 24.90% growth in July, the sector has recorded negative growth for seven consecutive months since then, with March alone showing an 18.07% decline.
Imports drive trade gap higher
Central bank data shows imports totaled $46.14 billion during July–February of FY2025–26, compared to $43.74 billion in the same period of the previous year—an increase of about 5.6%.
Export earnings during the same period were around $30 billion, slightly lower than the previous year.
As a result, the trade deficit widened to $16.91 billion in the first eight months of the fiscal year, up from $13.71 billion a year earlier—an increase of more than $3 billion.
Economists attribute the widening gap to several factors, including:
- Rising global prices of fuel and food commodities
- Higher imports of food grains, fertilizer, and consumer goods
- Slower-than-expected export growth, particularly in ready-made garments
Imports of essential commodities—including sugar, edible oil, chickpeas, lentils, and dates—also increased in February ahead of Ramadan, further contributing to import pressure.
Former World Bank chief economist Zahid Hussain said the widening deficit reflects both weak export momentum and stronger import demand.
Remittances cushion current account pressure
Despite the rising trade deficit, the current account position has improved slightly.
Bangladesh Bank data show the current account deficit stood at around $1 billion at the end of February, compared with $1.47 billion in the same period of the previous fiscal year.
Analysts say strong remittance inflows have played a key role in narrowing the gap.
From July to February, remittances totaled $22.45 billion, up from $18.49 billion in the same period a year earlier.
More recent data show $975 million in remittances were received between April 1 and April 8 alone, up about 26% year-on-year.
From the start of the fiscal year through the first week of April, total remittances reached approximately $27.18 billion, reflecting growth of more than 20% compared to the previous year.
Economists say that without this strong inflow of remittances, the current account deficit would have been significantly higher.
Financial account posts strong surplus
The financial account also recorded notable improvement in the first eight months of FY2025–26.
The surplus stood at $4.08 billion, compared with just $435 million in the same period of the previous fiscal year.
Experts attribute the improvement mainly to increased trade credit and the repatriation of previously delayed export proceeds.
Bangladesh Institute of Bank Management (BIBM) Director General Md. Ejazul Islam said a positive financial account indicates a significant inflow of foreign funds into the country, though part of it will need to be repaid in the future.
Foreign exchange reserves remain stable
Bangladesh Bank data show that gross foreign exchange reserves currently stand at $34.64 billion, while reserves under the IMF’s BPM6 methodology—considered usable—stand at $29.95 billion.
Central bank officials said rising remittance inflows and an overall positive external balance have helped maintain stability in reserves.
Outlook and challenges ahead
Experts say that although the trade deficit is widening, there is no immediate risk of a major external crisis due to:
- Strong remittance inflows
- A surplus in the financial account
- An overall positive external balance
However, they caution that longer-term stability will require export diversification, reduced fuel dependency, and more efficient import management.
Otherwise, global market volatility could intensify pressure on the trade balance and create renewed risks for the economy, economists warn.
