Does the sharp rise in imports of goods last fiscal year (FY26) reflect a rebound in investment in the country? The answer is no. Though the rise in imports is linked to investment activities, other factors also drive investment. For instance, growth of domestic credit is a key indicator of the domestic investment trend. The export trend may serve as another indicator for tracking investment. Moreover, decomposing imports by value and volume is necessary to understand their link to investment. All these are necessary, especially when monthly or quarterly data on domestic investment is not available.
Statistics from Bangladesh Bank showed that credit to the private sector grew modestly by 4.47 per cent at the end of last fiscal year. It is the lowest level in the country's history, according to a media report. Total outstanding loans to the private sector stood at Tk 18.26 trillion at the end of June, up 4.47 per cent from Tk 17.48 trillion a year earlier. If there were robust investment demand, credit growth would be much higher.
The stagnation in export growth in the last fiscal year also underscores the gloomy investment situation in the country. Earnings from exports stood at $48.38 billion in FY26, down from $48.70 billion, according to data available with customs authority. Though export performance largely depends on global market conditions, domestic factors like lack of increased investment are also important.
Overall imports of goods in the last fiscal year reached US$75.20 billion, growing 10 per cent from US$68.40 billion in FY25. Imports recorded double-digit growth after three years. Central bank statistics showed imports increased by only 2.40 per cent in FY25, following an 11.10 per cent decline in FY24.
The double-digit growth in imports is mostly driven by rising prices in international commodity markets. The cost of importing petroleum goods jumped by 107 per cent in the last fiscal year as the import bill rose to $10.63 billion from $5.14 billion.
The US-Israel joint war against Iran, initiated in February this year, pushed the global price of crude oil up. Due to the war in Iran, shipments through the Strait of Hormuz were heavily disrupted, and oil imports from the Middle East have been near zero since March. Instead, the country has to purchase oil and LNG from spot markets, making those more expensive. The Hormuz closure drove JKM spot LNG prices above US$35/MMBTU at one point, roughly triple the 2022 benchmark price. Last fiscal year, the volume of LNG imports stood at 5.1 million tonnes. Bangladesh Bank statistics also showed that petroleum products accounted for 14 per cent of overall goods imports in value terms last fiscal year, up from 7.52 per cent in the previous fiscal year.
The fertiliser import bill jumped 42 per cent last fiscal year to $3.72 billion from $2.62 billion in FY25. Though the volume of imported fertiliser increased modestly to 5.10 million tonnes from 4.44 million tonnes, the global rise in fertiliser prices inflated the import bill. The Iran war pushed urea prices to $700 per tonne in March 2026, up from the pre-crisis level of $290-$320. The price declined to around $360 by late June. Around 5 per cent of the total import bill was fertiliser payments last fiscal year.
A sharp increase in wheat imports resulted in the rise in foodgrain imports bill last fiscal year, while rice imports declined modestly. The wheat import bill reached $2.04 billion, up 26 per cent from $1.63 billion the previous year. The volume of wheat import, the second most-consumed cereal in Bangladesh, stood at 7.33 million tonnes, up from 6.14 million tonnes. In recent years, the country has seen growing demand for wheat in bakery, processed foods, and animal feed. Changes in food habits, such as increased bread consumption, also raised demand.
There was a decline in imports of RMG-related intermediate goods, such as raw cotton and yarn, reflecting subdued demand for industrial raw materials linked to lower export activity. Overall exports were almost stagnant, with knitwear exports declining around 2 per cent last fiscal year. In contrast, exports of woven garments increased by less than 1 per cent. In other words, there was almost no additional demand for raw materials and intermediate goods for the largest export-oriented industry. New investment was also thin.
In the last fiscal year, the country also witnessed a significant jump in coal imports, which stood at 20.71 million tonnes for use in coal-fired power stations. In terms of volume, it was the top imported product, followed by clinker, the essential raw material for the cement industry. Last fiscal year, the country imported 19.20 million tonnes of clinker worth $918 million.
The cost-driven surge in imports, coupled with lower investment demand last fiscal year, did not put foreign exchange reserves under pressure. By year-end, reserves were adequate to cover five months of import payments. For import payments of goods and services, reserves would cover four and a half months. Foreign exchange reserves stood at $32.90 billion under IMF BPM6, while gross official reserves were $37.58 billion. The central bank still counts the latter figure to estimate months of import coverage, which provides a misleading comfort zone.
Besides imports of goods, imports of services increased by 2.60 per cent to $12.80 billion in the last fiscal year. There was a significant 21 per cent surge in payments for travel-related services. However, transport-related services declined by around 9 per cent during the period under review. Payments for international transport services, accounting 55 per cent of the total imports of services, stood at $7.0 billion, followed by travel services worth $2.0 billion in FY26, according to the central bank's statistics.
Together, imports of goods and services stood at $88 billion in the last fiscal year, which was around 9 per cent higher than $80.8 billion in FY25. The amount is, however, not very big as the ratio of imports of goods and services to gross domestic product (GDP) is almost constant at 16 per cent on average for the last couple of years.
