Trade Gap Widens Sharply to $27.29b, Putting External Balance Under Pressure

The country’s trade deficit sharply widened to $27.29 billion in 2025-26, from $20.40 billion a year earlier, as import growth accelerates while export earnings remain almost unchanged, according to the latest Balance of Payments data revealed by Bangladesh Bank (BB) on Sunday.

The statistics show $6.89 billion increase in the trade gap underscores the growing imbalance in the country’s external sector. Imports rose to 10.5 per cent to $71.14 billion, while exports decline marginally by 0.2 per cent to $43.86 billion.

A senior Bangladesh Bank official said the widening gap between import payments and export earnings remains a major challenge for the external position.
The trade deficit had reached $23.95 billion during July-May 2025-26, compared with US$20.40 billion in the whole of 2024-25. It is expected to rise further in the final month of the fiscal year, taking the annual deficit to US$27.29 billion.

Imports are driving the deterioration. Import payments increased by $6.78 billion, from $64.36 billion in 2024-25 to $71.14 billion this fiscal year. On a CIF basis, imports reached to $75.24 billion, up 10.1 percent from $68.35 billion.

Export performance, meanwhile, remains weak. Total exports were at $43.86 billion, virtually unchanged from US$43.97 billion a year earlier. The weakness is particularly significant because Bangladesh remains highly dependent on the ready-made garment industry.

Garment exports declined by 1 per cent to $38.97 billion, from $39.35 billion. The fall reinforces the need to expand non-garment exports, diversify products and markets, and increase the share of higher-value goods in the country’s export basket.

The widening trade deficit is also affecting the broader current account. The current account deficit, which stood at $138 million in 2024-25, increased to US$281 million during July-May and reached to $1.59 billion for the full fiscal year.

Bangladesh’s services account remains a persistent source of pressure. The services deficit is at $5.74 billion, compared with $5.68 billion in the previous fiscal year. Service earnings were to total $7.06 billion against payments of US$12.80 billion.

The primary income deficit eased slightly to $4.78 billion, from $5.04 billion. However, official interest payments are expected to rise from $2.10 billion to US$2.20 billion, maintaining pressure on foreign-currency outflows.

Remittances remain the strongest support for the external account. Workers’ remittance inflows rose by 17.3 per cent to $35.59 billion, from $30.33 billion in 2024-25. During July-May, remittances already reached $32.77 billion, exceeding the full-year amount recorded in the previous fiscal year.

Investment and financing flows, however, remain subdued. Net foreign direct investment is projected to fall from US$1.72 billion to $1.47 billion, while medium- and long-term loan inflows are expected to decline 20.5 percent to $7.17 billion. At the same time, amortisation payments are projected to rise 20.7 per cent to $3.08 billion.

Despite these pressures, the reserve position is expected to improve. Gross official reserves are projected to rise from US$31.77 billion to US$37.58 billion, while reserves under the BPM6 measure are expected to increase from US$26.74 billion to US$32.93 billion. Reserve coverage is projected to improve from 5.0 months to 5.4 months of imports of goods and services.

The stronger reserve position provides a buffer against external shocks, but it does not eliminate the underlying imbalance. Bangladesh’s immediate challenge is to narrow the gap between import growth and export earnings. Sustained improvement will require faster export growth, greater diversification beyond garments and a more balanced import structure. Without these changes, the country will remain increasingly dependent on remittances and financial inflows to support its external position.