Bangladesh’s current account, which returned to surplus in FY2024-25, continued the positive trend in the first month of the new fiscal year, thanks to strong remittance inflows and solid export performance.
Provisional figures released by Bangladesh Bank on Monday provided the first snapshot of the country’s external sector for FY 2025–26. The data revealed a current account surplus of $245 million in July, compared to a $181 million deficit in the same month last year.
This improvement was largely driven by remittances from overseas workers and resilient export performance, helping stabilize the country’s balance of payments amid ongoing financial outflows.
Merchandise exports surged by 27.1% year-on-year, reaching $4.43 billion. Ready-made garments, the country’s dominant export, saw a nearly 25% increase, driven by strong demand in key Western markets ahead of the holiday shopping season. Bangladesh’s competitive garment sector continued to demonstrate resilience.
Imports, however, increased by 19.9% to $5.93 billion, primarily due to higher imports of raw materials, intermediate goods, and energy. As a result, the trade deficit stood at $1.5 billion, slightly higher than the gap recorded in July 2024.
The services account posted a deficit of $482 million, up from $338 million in the previous year, reflecting higher shipping and logistics costs. Primary income outflows, which include interest payments and profit repatriation by foreign investors, narrowed slightly to $291 million from $342 million.
The current account surplus was largely attributed to remittances, which surged by nearly 30% to $2.48 billion. These inflows provided essential foreign exchange liquidity, particularly as the financial account faced strain.
Despite the surplus in the current account, the financial account recorded a net outflow of $718 million, nearly three times the outflow recorded in July 2024.
While foreign direct investment more than doubled to $104 million and portfolio investment showed modest growth, these gains were overshadowed by a significant outflow of $833 million under “other investment,” which includes trade credits and loan repayments.
Bangladesh’s reserve assets increased to $29.8 billion from $25.8 billion a year earlier. However, when measured against import demand, reserves appeared thinner, covering about 4.3 months of imports, compared to 4.5 months previously.
The July data highlights both opportunities and risks in Bangladesh’s external position. While remittances and exports provided much-needed relief, the large trade deficit, widening services deficit, and heavy financial outflows continue to expose vulnerabilities in the external balance.
Economists cautioned that the sustainability of the surplus will depend on continued remittance growth and effective management of imports and external borrowing.
“Bangladesh enters the new fiscal year with momentum but also faces familiar risks,” said economic analyst and PTERC Chairman Md Mazedul Haque to TIMES of Bangladesh.
A senior managing director of a scheduled bank, who requested anonymity, told TIMES of Bangladesh, “The rise in remittances reflects trust in the interim government. However, imports of capital machinery remain negligible. We should not be overly optimistic about the surplus. Once the government begins servicing loan installments and ramping up development investment, the real question will be the state of reserves.”
