Written by Mrinal Haque
Dhaka, June 5, 2025 – Bangladesh’s balance of payments (BOP) is approaching stability, with its deficit narrowing 88% to $656 million in July-April FY25 (vs. $5.57B YoY), driven by record remittances and robust exports. This marks a dramatic turnaround for South Asia’s second-largest economy after two years of currency pressure .
Key Drivers of Recovery
- Export Boom:
- May 2025: $4.74B (11-month high, +11.45% YoY)
- July-May FY25: $44.95B (+10% YoY), led by garments (+11.85%), leather (+35%), and jute (+17%)
- Caveat: May spike reflects Eid-adjusted shipment timing (June orders advanced)
- Remittance Surge:
- July-April FY25: $24.54B (+28.3% YoY), adding $5.42B to current account
- Formal channels now capture ~65% of flows vs. 52% in 2024 (per BB incentives)
- Import Discipline:
- Trade deficit eased to $18.23B (-2.51%) despite 4.6% import growth
- Capital machinery imports remain sluggish (-18% since Jan 2025), signaling weak investment
Sectoral Breakdown (July-April FY25)
| Indicator | FY25 | YoY Change | Impact |
|---|---|---|---|
| Current Account Deficit | $1.39B | ↓ $4.64B | Eased forex reserve pressure |
| Financial Account Surplus | $1.96B | ↓ $286M | Lower FDI/budget support |
| Forex Reserves | $23.1B (est.) | ↑ 12% | Covers 4.1 months of imports |
Regional Context: South Asia’s Divergent Paths
- Bangladesh: BOP recovery contrasts with Q1 2025 volatility
- India: Record services exports (+17.8%) offset weak merchandise trade
- Pakistan: Remittances up 15% but IMF austerity caps import recovery
- Sri Lanka: BOP surplus achieved via drastic import compression
Source: World Bank South Asia Economic Focus (June 2025)
Expert Insights
“The debt-free nature of remittance and export inflows makes this BOP improvement sustainable. But capital goods import stagnation threatens future growth.”
– Prof Mustafizur Rahman, Distinguished Fellow, CPD
“May’s export spike is calendar-driven. Real test comes in Q3 when US tariff risks under a potential Trump administration materialize.”
– MA Rahim Feroz, Vice Chairman, DBL Group
Risks Ahead
- External Shocks:
- US tariff threats on Bangladeshi garments (35% of exports)
- Global shipping costs up 120% since Red Sea crisis
- Structural Weaknesses:
- Financial account surplus decline reflects falling FDI (-9.3% in FY25)
- Budget support delays from World Bank/ADB
- Inflation-Investment Trap:
- 9.3% inflation limits household savings
- Capital machinery imports down 22% in Q3 FY25
Policy Imperatives
- Short-term: Accelerate $2.1B World Bank/ADB budget support
- Medium-term: Diversify exports beyond garments (IT/agro-processing)
- Regional: Expand SAFTA services trade to offset goods deficit
*Sources: Bangladesh Bank, CPD, Export Promotion Bureau, World Bank (Data: April-May 2025)*
