Bangladesh’s trade deficit widened sharply to $7.47 billion in the first quarter of the fiscal 2026-27 as rising import payments outpaced export growth, pushing the current account back into deficit and increasing pressure on the country’s external sector.
The trade deficit stood at $5.71 billion in the corresponding period of the previous fiscal year, according to Bangladesh Bank data released today (5 November).
Import payments on a free-on-board (FOB) basis, including exports processing zones (EPZs), rose 15.1% year-on-year to $19.33 billion during July-September, compared with $16.8 billion a year earlier.
Import payments had stood at $12.20 billion during July-August, indicating a substantial increase in September.
Ezazul Islam, director general of the Bangladesh Institute of Bank Management, told The Business Standard that import payments surged from around $12 billion in July-August to nearly $19 billion by September, representing an increase of approximately $6 billion in a single month.
He said export growth failed to keep pace with the rise in imports, widening the gap between the two.
Higher global prices of oil, imported raw materials and other commodities also increased the overall import bill, he added.
Export receipts on an FOB basis, including EPZs, grew by 7% to $11.85 billion in the quarter, compared with $11.08 billion in the same period a year earlier. Shipment-based exports totalled $13.05 billion, up 6.4%.
Readymade garment (RMG) exports rose 6.2% to $10.545 billion during the quarter, up from $9.925 billion in the corresponding period of the previous fiscal year.
Current account slips into deficit
Bangladesh’s current account, which had recorded a surplus in the preceding month, swung to a deficit of $1.3 billion by the end of September, compared with a deficit of $821 million in the same quarter of the previous fiscal year.
Ezazul Islam said the current account had previously remained in surplus, supported by strong remittance growth, but the sharp increase in import payments had pushed it into negative territory.
The overall balance of payments recorded a deficit of $1.16 billion after accounting for the capital and financial accounts and errors and omissions of negative $259 million. This resulted in a corresponding adjustment of $1.16 billion in net reserve assets.
Remittances offer some relief
Remittances continued to provide an important cushion for the external sector, with secondary income inflows rising 13.3% year-on-year to $8.59 billion during July-September, compared with $7.58 billion a year earlier.
The financial account recorded a net surplus of $323 million in the quarter, down sharply from $1.796 billion in the same period of the previous fiscal year.
Net foreign direct investment (FDI) remained relatively stable at $353 million, while disbursements of medium- and long-term (MLT) loans fell 48% to $542 million.
Ezazul Islam said lower portfolio investment and long-term foreign investment had contributed to the sharp decline in net financial account inflows.
A treasury head at a private commercial bank, speaking on condition of anonymity, said higher liquefied natural gas (LNG) prices were adding to pressure on the foreign exchange market.
He said foreign currency inflows from exports, remittances and development partners’ loan disbursements were not increasing at the same pace as demand for dollars, contributing to the pressure on the exchange rate.
The current weakness in the dollar market was also linked to global economic conditions, he added.
Reserves come under renewed pressure
Bangladesh’s gross foreign exchange reserves stood at $36.015 billion at the end of September, while reserves calculated under the International Monetary Fund’s Balance of Payments and International Investment Position Manual (BPM6) stood at $31.199 billion.
At that level, reserves provided approximately 4.8 months of import cover for goods and services, or 5.3 months for goods alone.
Ezazul Islam warned that the upward trend in the trade and current account deficits could continue through October, November and December because of high international oil and commodity prices.
He cited oil prices of around $117 per barrel as an example of the pressure on import costs.
Bangladesh Bank spokesperson and Executive Director Arief Hossain Khan said the country had been purchasing LNG from the spot market at significantly higher prices to address the energy shortage, contributing to the widening trade deficit.
The deficit could narrow if export volumes increased in the coming months, he added.
Higher import demand to sustain private sector credit and economic growth could put further pressure on the exchange rate and foreign exchange reserves. In this context, fresh financing from the World Bank, Asian Development Bank (ADB), Japan and the International Monetary Fund (IMF) would be important in managing external pressures.
The recent increase in the dollar exchange rate has also coincided with a reversal in the reserve accumulation trend.
Gross reserves, which had risen to $37.41 billion on 1 September, subsequently declined to $36.43 billion. Under the IMF’s BPM6 methodology, reserves fell to $31.56 billion from $32.50 billion over the same period.
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