B Mirror Report: Bangladesh’s trade deficit increased 29% year-on-year to $3.82 billion in the first two months of fiscal year 2026-27, driven by a faster rise in import payments than export earnings, according to Bangladesh Bank data.
The country recorded a trade deficit of $2.96 billion in July-August of FY26.
Import payments rose 12.1% to $12.20 billion during July-August, while export earnings grew 5.8% to $8.38 billion.
The widening trade gap, however, was partly offset by a strong increase in remittance inflows, helping the current account surplus more than triple to $599 million from $197 million a year earlier.
Workers’ remittances reached $5.83 billion in the first two months of FY27, marking nearly 19% year-on-year growth. Remittances had grown 16% during the same period a year earlier.
At the end of August, Bangladesh’s gross foreign exchange reserves stood at $37.35 billion, while reserves calculated under the IMF’s BPM6 methodology stood at $32.44 billion. The latter was equivalent to around 5.2 months of import cover.
A sharp increase in petroleum import costs emerged as a key factor behind the higher import bill.
Petroleum imports more than doubled to $2.49 billion in July-August, compared with $1.25 billion a year earlier.
Zahid Hussain, former lead economist at the World Bank’s Dhaka office, said the surge in petroleum import expenditure was the main driver of overall import growth.
“Petroleum import expenditure increased by more than 115%. This was the main reason behind the 12% increase in import expenditure,” he said.
He said capital machinery imports did not play a significant role in the rise in import costs, although pressure was evident in some areas of the balance of payments.
Meanwhile, Bangladesh’s garment exports increased 5.3% to $7.49 billion during the period, maintaining their dominant position in the country’s export earnings.
Despite the improvement in the current account, Bangladesh continued to face pressure on its overall external position as the financial account recorded larger outflows.
Fahmida Khatun, distinguished fellow at the Centre for Policy Dialogue, said the widening trade deficit reflected the faster growth of imports compared with exports.
She said robust remittance growth had helped strengthen the current account, but higher financial account outflows prevented a broader improvement in the balance of payments.
Zahid Hussain also pointed to the widening financial account deficit as a major factor behind the deterioration in the overall balance.
He said the situation was mainly linked to a sharp fall in medium- and long-term foreign loan disbursements and a negative position in trade credit.
Foreign loan disbursements under medium- and long-term financing fell 60.9% year-on-year to $291 million in July-August. In contrast, amortisation payments amounted to $572 million during the period.
The government also utilised less foreign financing for development projects during the first two months of FY27.
Economists said the decline in fund utilisation could be linked to several factors, including delays in project implementation, approvals, tendering and procurement, as well as conditions attached to foreign loans. The available data, however, do not establish that project delays alone were responsible.
Fahmida urged the government to conduct project-by-project reviews with development partners to identify obstacles and take steps to resolve them.
She also called for regular disclosure of project progress and foreign fund disbursement information.
Alongside addressing project implementation issues, she stressed the need to strengthen export growth by diversifying products and markets and to encourage greater use of formal channels for remittance transfers.
This version keeps the figures and key analysis but uses a more independent structure and wording.
