Wednesday, 12 March, 2025
Bangladesh’s trade deficit continues to decline in the 2024-25 financial year as export growth surpasses import expansion.
The deficit fell by 9 percent year-on-year to $11.75 billion in the July-January period of FY2024-25.
According to the latest Bangladesh Bank data released on Tuesday, the deficit was $12.91 billion in the same period last year, marking a decline of $1.16 billion or 8.98 percent.
Exports grew by 10 percent year-on-year to $26.37 billion in the first seven months of FY2024-25, up from $23.98 billion in the same period of the previous fiscal year.
Meanwhile, imports rose by 3.30 percent to $38.11 billion, compared with $36.96 billion a year ago.
An analysis of the data shows the trade deficit has narrowed due to exports growing at a faster pace than imports.
Balance of payments data further reveals that the current account deficit stood at $552 million in July-January, down from $4.28 billion in the same period of the previous financial year—a decline of 87 percent.
The financial account also recorded a surplus of $85 million in the first seven months of FY2024-25, slightly higher than the $81 million surplus seen a year ago.
Former World Bank chief economist for Bangladesh Zahid Hussain told bdnews24.com, “It cannot be said that there has been an overnight improvement in the balance of foreign exchange transactions. The deficit widened from December to January due to rising import costs, whereas the previous month’s situation was relatively better.”
A trade deficit occurs when a country imports more goods and services than it exports. In other words, the value of a country's imports exceeds the value of its exports, leading to a negative balance in trade. This imbalance is often measured over a specific period, such as a month or year, and can be calculated as the difference between the total value of imports and exports.
A prolonged trade deficit can lead to a reduction in a country’s foreign exchange reserves, which may impact its ability to pay for imports or service foreign debt and can put pressure on the country's currency, leading to depreciation. As more of the local currency is exchanged for foreign currencies to pay for imports, the demand for foreign currency increases, potentially lowering the value of the domestic currency.
However, a trade deficit allows consumers to access cheaper goods and services from other countries, leading to increased consumer welfare and choice. Countries with trade deficits may attract foreign investment, as foreign capital can flow into sectors like real estate, infrastructure, and industries that rely on imports.
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Bangladesh’s trade deficit continues to decline in the 2024-25 financial year as export growth surpasses import expansion.
The deficit fell by 9 percent year-on-year to $11.75 billion in the July-January period of FY2024-25.
According to the latest Bangladesh Bank data released on Tuesday, the deficit was $12.91 billion in the same period last year, marking a decline of $1.16 billion or 8.98 percent.
Exports grew by 10 percent year-on-year to $26.37 billion in the first seven months of FY2024-25, up from $23.98 billion in the same period of the previous fiscal year.
Meanwhile, imports rose by 3.30 percent to $38.11 billion, compared with $36.96 billion a year ago.
An analysis of the data shows the trade deficit has narrowed due to exports growing at a faster pace than imports.
Balance of payments data further reveals that the current account deficit stood at $552 million in July-January, down from $4.28 billion in the same period of the previous financial year—a decline of 87 percent.
The financial account also recorded a surplus of $85 million in the first seven months of FY2024-25, slightly higher than the $81 million surplus seen a year ago.
Former World Bank chief economist for Bangladesh Zahid Hussain told bdnews24.com, “It cannot be said that there has been an overnight improvement in the balance of foreign exchange transactions. The deficit widened from December to January due to rising import costs, whereas the previous month’s situation was relatively better.”
A trade deficit occurs when a country imports more goods and services than it exports. In other words, the value of a country's imports exceeds the value of its exports, leading to a negative balance in trade. This imbalance is often measured over a specific period, such as a month or year, and can be calculated as the difference between the total value of imports and exports.
A prolonged trade deficit can lead to a reduction in a country’s foreign exchange reserves, which may impact its ability to pay for imports or service foreign debt and can put pressure on the country's currency, leading to depreciation. As more of the local currency is exchanged for foreign currencies to pay for imports, the demand for foreign currency increases, potentially lowering the value of the domestic currency.
However, a trade deficit allows consumers to access cheaper goods and services from other countries, leading to increased consumer welfare and choice. Countries with trade deficits may attract foreign investment, as foreign capital can flow into sectors like real estate, infrastructure, and industries that rely on imports.
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