Written by The Banking Post
Bangladesh’s current-account deficit widened in the first five months of the current fiscal year as import payments rose faster than export earnings, even though the overall balance of payments (BoP) swung back to a healthy surplus.
Official data show the current-account deficit stood at $696 million during July–November, up from $568 million in the same period a year earlier. In contrast, the overall BoP posted a surplus of $769 million, reversing a $2.54 billion deficit recorded in the corresponding period of the previous year.
The turnaround was driven mainly by the financial account, which recorded a surplus of $1.23 billion, compared with a deficit of more than $1.0 billion a year earlier. Economists said this surplus, along with positive entries under errors and omissions, more than offset the widening current-account gap.
The pressure on the current account stemmed largely from subdued export growth and higher imports. Export receipts rose by less than 1.0 per cent to $18.2 billion during the period, while import payments increased 6.1 per cent to $27.6 billion, widening the trade deficit to over $9.0 billion.
“Higher imports suggest a recovery in domestic demand, which signals economic momentum,” said an independent economist. “But flat export growth remains a serious concern.”
He noted that the financial account benefited from an improvement in trade credit, which moved from a large negative position to a small surplus, alongside stronger net aid inflows. However, he cautioned that short-term credit continued to see significant net outflows.
Offering a more positive view, the director general of the Bangladesh Institute of Bank Management said the financial account was also supported by stronger foreign direct investment. FDI inflows rose to $671 million, about 65 per cent higher than a year earlier, while net aid inflows climbed to $504 million, up more than 87 per cent year on year.
He added that rising imports were consistent with an economy gaining traction, pointing to a nearly 10 per cent increase in capital goods imports to $4.3 billion during the period.
While improved inflows have eased external pressures for now, economists warned that sustaining the BoP surplus will depend on a recovery in export growth, especially as global demand remains uncertain amid recent geopolitical developments.
