Bangladesh's trade with Saarc countries rebounds with positive growth in FY25

Trade between Bangladesh and its South Asian neighbours rebounded in the fiscal year 2024-25, marking a shift from previous declines with positive growth in both exports and imports.

According to the latest 'Economic Engagement of Bangladesh with SAARC' report by Bangladesh Bank, the recovery in regional trade was primarily driven by increased economic activity with India and Pakistan.

The report said Bangladesh's regional trade rebounded in FY2024-25 due to higher demand for garments and pharmaceuticals in India and Pakistan. Imports also increased as the country stepped up procurement of essential raw materials and commodities from neighbouring countries.

Import payments to countries of the South Asian Association for Regional Cooperation (Saarc) reached $10.5 billion in FY25, representing a 7.8% increase ($764.9 million) compared to the previous fiscal year. The growth follows a contraction of $573.5 million in FY24, signalling a recovery in regional procurement. 

India remained the dominant source, accounting for 91.4% of total regional imports. Import payments to India rose to $9,624.1 million in FY25, up from $9,000.2 million in the previous year. Major imports from India included textiles, vegetable products and chemical goods.

Imports from Pakistan also recorded a notable increase, reaching $755.3 million in FY25, compared with $627.8 million in FY24, making Pakistan the second-largest exporter to Bangladesh within the Saarc bloc.

Export earnings see positive trend

On the export front, Bangladesh's receipts from Saarc countries reached $1.9 billion in FY25, an increase of $175.5 million compared to the previous year, which central bank officials described as a "definitely positive sign" for merchandise trade.

India remained the largest buyer, accounting for around 88.83% of Bangladesh's regional exports, with earnings rising to $1,704.8 million.

Exports to Pakistan also showed growth, reaching $71.6 million, a 15.3% increase over the previous fiscal year. Bangladesh's export basket to the region continues to be dominated by ready-made garments (RMG), pharmaceuticals and leather products.

Trade deficit and regional outlook

Despite the positive trends, Bangladesh continues to face a significant trade deficit with the Saarc region, which stood at $8.6 billion in FY25. Regional imports are more than four times the value of exports, largely due to the country's heavy dependence on essential commodities and raw materials from India.

The report noted that while engagement with India is strong, trade with other Saarc members such as Nepal, Bhutan and Sri Lanka remains limited, indicating "significant untapped potential" for further diversification.

Beyond merchandise trade, the report highlighted strong growth in remittances, which exceeded $30 billion globally in FY25, marking a 26.8% increase that helped offset the regional trade imbalance.

Net FDI inflows reached $1,686.2 million during the same period.

The report also noted that global remittances saw a sharp rise, with the Maldives emerging as a key regional contributor. Foreign direct investment strengthened due to consistent inflows from India, particularly into sectors such as telecommunications.

Government initiatives aimed at improving the investment climate through streamlined services also played an important role in attracting these capital inflows, the report added.