United News of Bangladesh

A double-digit drop in capital machinery imports and falling export revenues have driven Bangladesh’s trade deficit up by nearly 24 percent to $23.98 billion in FY 2025-26, leaving a historic $35.5 billion remittance surge to single-handedly cushion the external economy from severe distress. The external trade is presenting a stark, two-way picture. On one hand, a slowdown in industrial raw material and capital machinery imports points to sluggish domestic manufacturing; on the other, export earnings have failed to meet expectations. Consequently, the country’s trade imbalance has worsened, driving the foreign trade deficit up by nearly 24 percent. However, a record surge in foreign remittances has significantly cushioned the pressure on external transactions and played a pivotal role in boosting foreign exchange reserves. Data from Bangladesh Bank's Economic Indicators and Balance of Payments (BoP) reports, combined with Export Promotion Bureau (EPB) statistics, paint a challenging macroeconomic landscape. Economists attribute this subdued trade momentum in FY 2025-26 to global uncertainties, high interest rates, financial distress among major industrial conglomerates, rising production costs, and a lingering deficit in business confidence. Trade Deficit Surges to $23.98 Billion: The gap between Bangladesh’s imports and exports widened sharply during the first 11 months (July–May) of the fiscal year 2025-26, according to Bangladesh Bank data. Total Imports (July–May): $64.02 billion Total Exports (July–May): $40.04 billion Trade Deficit: $23.98 billion This represents a 23.73 percent (nearly 24%) increase compared to the $19.38 billion trade deficit recorded during the same period of the previous fiscal year. Economists warn that if export growth remains sluggish, maintaining this import burden could severely strain the external sector over the long term. In FY 2025-26, import settlements via Letters of Credit (LCs) stood at $70.4 billion, reflecting a negligible growth of 0.09 percent compared to $70.3 billion in the preceding year. Because import settlements serve as a key barometer for industrial activity, this stagnation signals that the manufacturing sector has yet to regain full momentum. While fresh LC openings increased by 7 percent to $74.7 billion—hinting at potential future recovery—business owners remain cautious regarding major capital commitments. The most concerning contraction occurred in essential production inputs: Industrial Raw Materials: Fell 3.33 percent to $23.18 billion. Capital Machinery: Dropped 10.68 percent to just $1.80 billion, highlighting a sharp decline in long-term investment. Consumer & Intermediate Goods: Declined by approximately 7 percent each. Energy (Exception): Petroleum imports bucked the trend, rising 6.42 percent to $10.68 billion. Bankers and industrial leaders noted that following recent political shifts, several prominent business groups—including Beximco Group, Nassa Group, and Gazi Group—have had factory operations suspended or restricted to just 30 to 40 percent capacity. Coupled with high interest rates and rising debt costs, new investments have ground to a halt. Exports miss $55 billion target: The domestic manufacturing slowdown directly spilled over into export performance. Total merchandise exports for FY 2025-26 reached approximately $48 billion —a 0.58 percent drop year-on-year, missing the government’s target of $55 billion. The Ready-Made Garment (RMG) sector, which accounts for nearly 80 percent of total exports, generated around $38.7 billion. Exporters attributed the shortfall to: i) US retaliatory tariffs and intense competition in European markets. ii) Softening global demand and high domestic logistics costs. iii) Persistent energy shortages and high interest rates. Although June recorded a 26 percent spike in exports, analysts note this was primarily driven by a higher number of working days rather than a genuine surge in international demand or new market penetration. Record remittances provide critical relief: Amid trade pressures, the remittance sector emerged as the economy's strongest pillar. Bangladesh received a record $35.5 billion in remittances in FY 2025-26, marking a 17.3 percent increase year-on-year. This robust inflow significantly narrowed the current account deficit and helped generate a $4.16 billion surplus in the financial account, preventing severe balance-of-payments distress. In response to trade headwinds, the government has initiated steps to launch the country’s first Free Trade Zone (FTZ). Bangladesh Bank has already issued comprehensive guidelines allowing duty-free import, storage, processing, repackaging, re-labeling, and re-exporting of raw materials on a consignment basis without needing conventional LCs. Business leaders anticipate this move will reduce lead times, optimize working capital, and enhance supply chain efficiency. Commenting on the economic trajectory, Mohiuddin Rubel, Founder & CEO of Bangladesh Apparel Voice and former Director of BGMEA, emphasized the need for structural policy support. "Exporting is not solely dependent on foreign demand; it is directly tied to domestic production capacity, raw material supply, energy, logistics, and the investment climate. The decline in raw material and capital machinery imports is a clear warning sign for future production. The investments we lack today will manifest as reduced output and exports months down the line," he added. "Global competition is fierce, with rival nations like Vietnam and India leveraging various Free Trade Agreements while Bangladesh prepares for LDC graduation. To stay competitive, we must reduce the cost of doing business, enhance port efficiency, guarantee uninterrupted energy, and accelerate trade facilitation reforms. The FTZ is a positive initiative, but realizing its full potential requires effective policy execution, rapid customs clearances, product diversification, and new market entry," said Mohammad Hatem, President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA). There is no alternative to reforms to increase competitiveness. Professor Mustafizur Rahman, distinguished fellow of CPD told UNB, “The coming days will be more difficult due to global conflicts, transition from LDCs and free trade agreements with competing countries.” According to him, Bangladesh’s competitiveness must be increased by reducing business costs, improving logistics systems, implementing a National Single Window, facilitating trade, diversifying export products and quickly concluding a Free Trade Agreement (FTA). Entrepreneurs in the garment sector also say that competing countries like India and Vietnam are getting additional benefits in the European Union market. Therefore, reducing production costs, ensuring energy supply and increasing the efficiency of ports and logistics are the biggest demands of the time. Masrur Reaz, Chairman and Founder, Policy Exchange Bangladesh, also former senior economist of World Bank Group told UNB that there is no alternative to product diversification to enhance Bangladesh’s export share in the global markets. Bangladesh is earning 83 percent of its export from a single Readymade Garment (RMG) sector. Whearese, Vietnam and other competitor countries are exporting huge diversified products, as a result, the export volume of those countries is increasing at desired level, he pointed out. Masrur also emphasised upgradation of smart technology and appointment of tech-know how skilled people in the manufacturing sector through a long term policy to increase export and set stability in the domestic economy.  

Commerce Minister Tipu Munshi in the Parliament today (September 1, 2022) claimed that prices of daily essentials are at a tolerable level.  In response to a question from Jatiya Party MP from Kishoreganj, Mujibul Huq, Tipu Munshi said that several steps have been taken to keep prices of essentials within the reach of the masses. In response to Awami League MP, elected from Brahmanbaria, Ebadul Karim's question, the Commerce Minister said that Bangladesh exported goods to 203 countries in the financial year 2021-22.  Out of these, Bangladesh has trade deficit with 91 countries and trade balance with 112 countries is in favour of Bangladesh.  In the 2021-22 financial year, exports are worth 60, 971.26 million dollars and imports worth 82, 500 million dollars.  That means the trade deficit in the financial year 2021-22 is 21, 528.74 million US dollars. In response to Awami League MP elected from Dhaka Benazir Ahmed, the Minister said that trade deficit with SAARC countries in the financial year 2021-22 is 11, 986.98 million US dollars.  In the 2021-22 financial year, trade deficit with China is 19,353.37 million US dollars.  The minister said that some 8930 products (98 percent) have received duty-free, quota-free access to the Chinese market due to the government's efforts from today.   Also read: Bangladesh’s trade deficit widens to over $27bn in 10 months As a result, exports to China will increase and the trade deficit will decrease, he said. In response to AL MP elected from Bhola Ali Azam, Food Minister Sadhan Chandra Majumder said that currently (as of August 30, 2022) the country has 19,50,531 metric tons of food grains.  Among them are 17,33,300 metric tons of rice and 1,41,118 metric tons of wheat. He said that to import wheat from Russia and rice from India, Myanmar and Vietnam, the government is going for G2G system. In response to another question from the same MP, the food minister said that the total food grain consumption of 16.52 crore people of the country is 233.35 lakh metric tons.  Out of this, 221.41 lakh metric tons are rice and 11.94 lakh metric tons of wheat.  In the financial year 2021-22, the production of food grains was 389.29 lakh metric tons, Which is more than the demand. Stating that there is no possibility of food crisis in the country, the minister said that according to the National Food and Nutrition Security Policy, 10.5 million metric tons of foodgrains are supposed to be kept in safety stock, but currently there is more stock than this. In response to Jatiya Party MP elected from Pirojpur Rustam Ali Faraji, the Food Minister said that in the financial year 2021-22, 15,44,145.8 metric tons of rice, 19,95,539.6 metric tons of edible oil, 699,129.3 metric tons of onions and 54,237.6 metric tons of garlic have been imported. In response to Jatiya Party MP elected from Rangpur Mashiur Rahman Ranga, the minister said that in the financial year 2021-22, 67,02,688.5 metric tons of wheat, 27,77,468.8 metric tons of oilseeds, 27,08,049 metric tons of sugar, 3,63,107.5 metric tons of spices, 12,48,392.7 metric tons of pulses, 12,36,131.4 metric tons of fruits, 1,56,246.2 metric tons of dairy products have been imported. In response to a question of AL MP from reserved seats for woman Begum Nazma Akhtar, Expatriates Welfare Minister Imran Ahmed said that according to the information of the Expatriate Welfare Desk, 4,08,408 workers have returned from abroad in 2020 during the pandemic. Besides, in 2021 some 34, 494 workers have returned without pass till May. Also read: Bangladesh’s trade deficit rose to $30.81 billion in 11 months In response to AL MP elected from Bhola Nurunnabi Chowdhury, the Minister of Expatriates Welfare and Overseas Employment said that some 73,19,316 workers have been sent to different countries from the financial year 2008-2009 to the financial year 2020-21.  According to the minister, the highest number of people went in the financial year 2016-17 which is 8,93,739 people.    The lowest number is 2,71,445 people in the financial year 2020-21.

Bangladesh’s trade deficit has widened to USD $ 30.81 billion in 11 months of current fiscal year (FY) due to hefty rise of import demand in post Covid-19 pandemic period. Bangladesh Bank (BB) on Monday released this data ‘the current account balance’ after clearing foreign transactions. In the last FY 21, the trade deficit was $2.28 billion. Bangladesh export has increased by 32.98 per cent in the July-May of the current financial year, while the import rose to 39.03 per cent, BB data showed. Also Read: Bangladesh’s trade deficit widens to over $27bn in 10 months Dr Salehuddin Ahmed, former governor of BB told UNB that the situation created as imports are increasing but exports and remittances are decreasing. “If we want to reduce the deficit, we have to increase exports and remittances. Besides, luxury and unnecessary imports have to be reduced,” he added. He also urged to increase vigilance on imported goods and containers that the goods against import LCs are really entering in the country.

Bangladesh’s trade deficit has widened to USD $ 27.56 billion in 10 months of the current fiscal year  due to hefty rise in import demand following easing of Covid-19 pandemic. Bangladesh Bank on Thursday released the ‘the current account balance’ after clearing foreign transactions. In the last FY 21, the trade deficit was $2.28 billion. The BB data shows that during July -April of the current financial year, the exports increased by 34.56 per cent. On the other hand, imports grew by 41.42 per cent during the same period. READ: Various nations expressing interest about Bangladesh’s trade, economy: Tipu Munshi In these 10 months, the country has earned $41.10 billion from exports while it spent $ 68.67 billion on imports. Dr Salehuddin Ahmed, former governor of BB told UNB that the gap has widened as imports are increasing while exports and remittances are decreasing. “If we want to reduce the deficit, we have to increase exports and remittances. Besides, luxury and unnecessary imports have to be reduced,” he added.  He also urged increased vigilance on imported goods and containers to ensure that the goods against import LCs are really entering in the country.

Japan recorded a trade deficit for the month of January Wednesday, as exports declined amid worries about the spread of a new virus that could deaden regional economic growth.