Bangladesh’s import trade is showing signs of renewed momentum, with the opening of letters of credit (LCs) rising by nearly 18 per cent in the first two months of the 2026–27 financial year. LC settlements also recorded growth of more than 10 per cent, indicating an improvement in overall import activity.
According to the latest updated data from Bangladesh Bank, the increase was particularly strong in LCs opened for consumer goods. Imports of capital machinery also recorded growth in new LCs. However, the figures present a mixed picture, as settlements declined in both industrial raw materials and capital machinery despite increases in the opening of new LCs.
During July and August of the current financial year, LCs worth US$13.94 billion were opened, compared with US$11.82 billion during the same period a year earlier. This represents an increase of US$2.118 billion, or 17.92 per cent, year on year.
LC settlements also increased during the period. Their total value reached US$12.466 billion in the first two months of 2026–27, up from US$11.257 billion in the corresponding period of the previous financial year. The increase amounted to US$1.209 billion, or 10.74 per cent.
People familiar with the sector attribute the improvement partly to a rise in remittance inflows and some easing of pressure on the US dollar market. During the previous government’s tenure, import restrictions had been imposed on various products to reduce pressure on foreign exchange reserves. The subsequent improvement in foreign currency availability appears to have strengthened importers’ ability to open and settle LCs.
However, an increase in LC openings does not necessarily mean that the corresponding imports have already been completed. Opening an LC initiates the import process, while settlement reflects the payment obligations associated with the transaction. The two indicators therefore provide different insights into the pace of import activity.
Consumer Goods Lead Growth in LC Openings
Consumer goods recorded the strongest growth among the categories highlighted in the central bank’s data. LCs worth US$1.259 billion were opened for consumer goods imports in July and August, compared with US$1.003 billion in the same period last year.
This represents an increase of US$256 million, or 25.50 per cent.
Settlements in this category also rose, although at a slower rate. The value of settled LCs for consumer goods reached US$1.017 billion during the first two months of the current financial year, up from US$923 million a year earlier.
The increase was US$94 million, equivalent to 10.10 per cent.
The stronger growth in LC openings suggests increased activity among importers of consumer goods. Nevertheless, the slower rise in settlements indicates that the growth in newly opened LCs has not been matched by an equivalent increase in completed payment transactions over the same period.
Industrial Raw Material Imports Remain Almost Flat
LC openings for industrial raw materials recorded only marginal growth, suggesting that activity in this segment remained broadly stable.
During July and August, importers opened LCs worth US$4.216 billion for industrial raw materials, compared with US$4.207 billion in the corresponding period of the previous financial year. The increase was just US$9 million, or 0.21 per cent.
Settlements in this category moved in the opposite direction. The value of settled LCs fell to US$3.802 billion from US$3.887 billion a year earlier, a decline of US$85 million, or approximately 2.19 per cent.
Industrial raw materials are closely linked to manufacturing and production activities. The near-stagnation in new LC openings, alongside the decline in settlements, is therefore an important aspect of the overall import picture.
However, these figures alone are insufficient to establish whether industrial production has increased or decreased. A broader assessment would require additional information on factory output, demand, capacity utilisation and other relevant economic indicators.
Capital Machinery LC Openings Rise 12.87%
Imports of capital machinery, which support industrialisation and production capacity, also recorded an increase in new LC openings.
LCs worth US$357 million were opened for capital machinery imports during July and August, compared with US$317 million in the same period of the previous financial year. This represents an increase of US$40 million, or 12.87 per cent.
Settlements, however, declined. The value of settled LCs for capital machinery stood at US$291 million in the first two months of 2026–27, down from US$308 million a year earlier.
The decline amounted to US$17 million, or 5.52 per cent.
Capital machinery imports are associated with investment in industrial equipment and the expansion of production capacity. The rise in new LC openings may therefore be a positive signal for prospective investment activity. Yet the fall in settlements suggests that the improvement in new orders has not translated into higher settlement volumes during the period under review.
Further data will be needed to determine whether the growth in LC openings leads to a sustained increase in machinery imports and investment.
Import Recovery Presents a Mixed Picture
The central bank’s figures show that both LC openings and settlements increased across the import sector during the first two months of the current financial year. The pace of growth, however, varied considerably by product category.
Consumer goods recorded strong growth in both openings and settlements. Industrial raw materials saw only marginal growth in new LC openings, while settlements declined. Capital machinery followed a similar pattern, with openings rising but settlements falling.
These differences underline why LC openings alone cannot provide a complete picture of the country’s import recovery. Foreign currency availability, the ability to meet payment obligations, demand for industrial inputs and the pace of investment all remain relevant to a broader assessment.
The latest figures from Bangladesh Bank point to renewed momentum in import activity. Whether that improvement can be sustained will depend, in part, on developments in the foreign exchange market and the extent to which growth in new LCs is reflected in subsequent settlements and completed imports.
