Bangladesh’s trade deficit widened sharply in the first eight months of the current fiscal year as higher import payments and declining export earnings increased pressure on the external sector, according to Bangladesh Bank data.
The merchandise trade gap rose to $16.91 billion in July–February of FY26, up from $13.7 billion in the same period of the previous fiscal year.
The increase came as import payments grew by 5.6 per cent while export earnings declined by 2.6 per cent.
Total merchandise exports stood at $29.26 billion during the period.
The ready-made garment sector contributed about $26 billion, maintaining its dominant share in export earnings, but the sector recorded a contraction amid weak global demand and continued price pressure from international buyers.
Higher domestic production costs also affected export competitiveness.
Some sectors showed moderate growth. Leather and leather products, jute and jute goods, engineering items and home textiles posted gains.
However, the increases remained insufficient to offset the slowdown in garment exports, leaving overall export performance weak.
In contrast, import payments rose to $46.17 billion in the eight-month period.
The increase was driven mainly by higher imports of intermediate goods, which rose by 7.1 per cent to $30.35 billion.
Petroleum imports surged by 52 per cent, while fertiliser imports increased by about 60 per cent, reflecting stronger demand for energy and agricultural inputs.
Imports of capital goods rose by 2.3 per cent to $6.65 billion, including a 5.7 per cent increase in capital machinery.
The data indicate cautious but ongoing investment in industrial capacity despite uncertainties in the business environment.
The higher import bill contributed to a widening services deficit, which reached $3.84 billion.
Payments for transport, travel and other services increased faster than earnings.
Travel-related expenses rose by 26.1 per cent, driven largely by spending on overseas education and medical treatment.
The primary income account also remained in deficit at around $3 billion due to profit repatriation by foreign companies and interest payments on external borrowing.
Official interest payments alone amounted to $1.43 billion during the period, reflecting increased debt servicing obligations.
Despite pressures from trade and income accounts, the current account deficit narrowed to about $1 billion in July–February FY26, compared with $1.47 billion a year earlier. The improvement was mainly supported by strong growth in remittance inflows.
Workers’ remittances rose by 21.4 per cent to $22.45 billion during the period.
Inflows increased significantly from Saudi Arabia, the United Kingdom and Malaysia, although receipts from the United States declined sharply.
Increased use of formal banking channels and relative exchange rate stability supported the rise in remittances.
The financial account recorded a surplus of about $4 billion, a sharp increase from $435 million in the same period of the previous year.
The surplus was driven by higher loan disbursements, trade credit and banking sector inflows.
Net foreign direct investment stood at $871 million, while loan repayments also increased.
With stronger inflows in the financial account, the overall balance of payments recorded a surplus of $3.42 billion, reversing a deficit of $1.15 billion a year earlier.
Foreign exchange reserves improved during the period. Gross reserves rose to $35.1 billion, while reserves calculated under the IMF’s BPM6 method stood at $30.35 billion, indicating a relatively stronger external position despite persistent trade pressures.
