Foreign Capital Inflows Cushion Bangladesh Economy as Trade Gap Spreads

Bangladesh’s merchandise trade deficit widened considerably throughout the first eleven months of the 2025-26 fiscal cycle, heavily impacted by ongoing global commodity shocks, high energy import pricing, and muted export performance. According to the Balance of Payments data published by the central bank, the country’s visible trade deficit reached approximately $23.98 billion during the July-May window. This represents a stark 24 per cent increase over the same period in the preceding fiscal year, which logged a more manageable $19.38 billion deficit.

The data highlights a significant acceleration in spending imbalances toward the end of the reported period. While the cumulative trade shortfall had reached $22.21 billion by April’s conclusion, an influx of imports throughout May tacked an extra $1.77 billion onto the deficit within a single month. Total import bills scaled to $64.02 billion over the eleven months, substantially outrunning export receipts, which stalled at $40.04 billion. The expanding trade gap marks a clear departure from the 2024-25 fiscal year, which saw the deficit taper down to $20.45 billion.

Conversely, the nation’s underlying macroeconomic position remains shielded due to structural improvements across other key ledgers. Most notably, the current account deficit compressed dramatically to $301 million for the July-May duration. This represents a robust recovery from the deeper $1.23 billion cumulative deficit seen just a month prior in April. The recovery was largely catalysed by stable waves of inward worker remittances paired with tighter controls on outbound service spending, beating the $778 million deficit recorded during the same months of the previous year.

Compounding this stabilization, Bangladesh registered a powerful surplus within its financial account, pulling in a net capital inflow of $4.16 billion by May’s end. This vital account, which tracks foreign direct investment, external aid, and short-term credit lines, started the year poorly with a $916 million shortfall in July. It has since staged a consistent turnaround, advancing to a $1.66 billion surplus by September, crossing the $2.04 billion mark in December, and accelerating past $4.16 billion in May. This upward trend reverses the $214 million financial account deficit logged during the equivalent period of the 2024-25 fiscal cycle.

Bolstered by these capital injections, the overall Balance of Payments recorded a comfortable net surplus of $4.02 billion for the eleven-month span. Mirroring the recovery path of the financial account, the broader balance clawed its way out of an initial $545 million deficit in July to build a steady surplus position from August onwards. The performance marks a resilient continuation of the $3.29 billion surplus achieved at the end of the 2024-25 fiscal year, demonstrating a sustained structural recovery following the heavy $4.30 billion macroeconomic deficit endured back in 2023-24.