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Improved exports and narrowing current account deficit boost balance of payments

Bangladesh’s trade deficit narrowed by 4.24% in the first eleven months of the 2024–2025 fiscal year, signaling a gradual improvement in the country’s external balance amid rising exports and a sharp reduction in the current account deficit.

According to data released by Bangladesh Bank on Sunday, the trade deficit stood at $19.38 billion during the July–May period of FY25, down from $20.24 billion recorded in the same period of the previous fiscal year — a year-on-year decrease of over $840 million.

Export earnings surged to nearly $40.87 billion, marking a 9.45% increase from $37.34 billion in the corresponding period of FY24. Meanwhile, imports rose moderately to $60.34 billion, up 4.80% from $57.57 billion a year earlier.

Current Account Deficit Narrows Sharply

One of the most notable improvements came in the current account, which recorded a deficit of just $432 million — a dramatic improvement from the $6.11 billion deficit during the same period last year.

The current account, which captures the country’s routine international transactions — including exports, imports, remittances, and service payments — is a key indicator of external sector health. A reduced deficit eases pressure on foreign reserves and lowers the need for external borrowing.

Financial Account Surplus Declines

However, the financial account — which tracks capital inflows such as foreign loans, grants, and investments — saw a significant decline. It registered a surplus of $2.66 billion during the eleven-month period, compared to a $20.7 billion surplus in the same period of FY24.

Despite the sharp fall, the overall Balance of Payments (BoP) position has improved, buoyed by a stronger current account and improved export performance.