Export earnings slow down, trade deficit widens

Staff Reporter | PNN

Due to export earnings growth remaining below expectations, pressure on the country’s merchandise trade deficit has increased again at the beginning of the 2025–26 fiscal year. According to updated statistics from Bangladesh Bank, the merchandise trade deficit stood at approximately USD 9.41 billion during the first five months (July–November) of the fiscal year, which is significantly higher than during the same period of the previous fiscal year.

According to the central bank’s current account balance report released on Wednesday, the merchandise trade deficit during the same period last fiscal year was approximately USD 7.93 billion. This means the deficit has increased by more than 15 percent year-on-year.

The report shows that during the first five months of the current fiscal year, imports amounted to approximately USD 27.59 billion, which is about 6 percent higher than during the same period last year. Officials believe this increase is due to higher imports of industrial raw materials, fuel, and consumer goods. In contrast, export earnings during the same period stood at approximately USD 18.18 billion, showing only a slight increase from the previous year.

Bangladesh Bank said the widening gap between imports and exports is the main reason behind the growing trade deficit. Economists say the pressure is due to high global prices of fuel and raw materials, as well as slower order flows in some major export sectors.

A deficit trend is also visible in the current account balance. By the end of November, the current account deficit stood at approximately USD 700 million, higher than during the same period last year. An increase in the current account deficit raises dependence on external financing, which can pose additional risks for a developing economy.

However, the overall balance of payments remains relatively positive. By November, the overall balance stood at approximately USD 770 million, whereas there was a large deficit during the same period last year.

There are signs of relief in remittance inflows. During the first five months of the fiscal year, expatriate Bangladeshis sent home approximately USD 13.04 billion, which is nearly 17 percent higher than the previous year. Foreign direct investment (FDI) also improved, reaching approximately USD 650 million during the same period.

However, negative trends continue in foreign portfolio investment in the stock market. During the first five months of the current fiscal year, several million dollars were withdrawn as net foreign portfolio investment, raising renewed concerns about investor confidence.

Experts believe that without export diversification, control of energy costs, and strengthening an investment-friendly environment, it will be difficult to manage the pressure on the trade and current account deficits.