Current account turns negative in Jul-Sep amid import surge

Bangladesh's current account turned negative in the first quarter (July-September) of the current fiscal year 2025-26 due to a widening trade deficit driven by higher imports, despite strong remittance inflows.

Infographics: TBS

According to updated balance of payments (BOP) data released by Bangladesh Bank yesterday, the current account recorded a deficit of $481 million in July-September, compared to a surplus of $60 million in the same period last year.

The current account balance is a key component of a country's BOP that measures its net trade in goods and services, income from abroad, and current transfers.

Meanwhile, remittance inflows rose to $7.59 billion in July-September 2025, up from $6.54 billion in the same period last year, data shows.

Economists and Bangladesh Bank officials said that despite over $1 billion more remittances, the current account has turned negative largely due to a rising trade deficit caused by an import surge. A senior Bangladesh Bank official added that the increase was primarily due to higher petroleum and fertiliser imports.

In the first three months of the current fiscal year, petroleum imports rose by 43% compared to the same period last year, reaching $2.06 billion, up from $1.40 billion. Fertiliser imports increased by 24.16% over the same period, totalling $554 million compared to $446 million in the previous year.

Professor Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), said, "Due to higher imports, the service account could not offset the current account, leading to a negative balance. Imports are expected to rise further in the coming months. Importing goods is positive for the economy because it supports growth."

"Efforts should be made to maintain the flow of remittances and imports. This will help improve the state of the current account," he added.

Trade deficit rises by 23.13%

According to Bangladesh Bank data, the trade deficit in Jul-Sep of FY26 reached $5.71 billion, compared to $4.64 billion in the same period last year – a 23.13% increase.

Data shows the main reason for the wider trade deficit is higher imports. In July–September, imports rose 10.60% year-on-year, reaching $16.80 billion, compared to $15.20 billion in the same period of the previous year.

Exports during the same period increased by 5.10% year-on-year. From July to September, exports stood at $11.09 billion, up from $10.56 billion in the same period last year.

Financial account in surplus

The country's financial account surplus exceeded $1.5 billion in the first three months of FY26, driven by rising trade credit and medium- to long-term loans.

The financial account is a key component of the BOP, tracking the flow of capital – including investments, loans, and financial assets – between the country and the rest of the world.

According to Bangladesh Bank data, trade credit in the first three months stood at $968 million, compared to a deficit of $655 million in the same period of the previous fiscal year.

Medium- and long-term loans also increased by 56.30% during the same period, reaching $1.39 billion, up from $664 million a year earlier. A senior Bangladesh Bank official noted that this rise contributed to the improvement in the financial account.

Zahid Hussain, former lead economist at the World Bank Dhaka office, said, "The increase in trade credit and medium- to long-term loans has significantly improved the financial account. As imports rise, credit financing also increases, which explains the inflow in trade credit, since it typically records an outflow."

He added, "The rise in medium- and long-term loans indicates that the government has secured more loans. Banks have also borrowed more from abroad. Additionally, errors and omissions have decreased. Taken together, these factors have strengthened the financial account."

Overall BOP in surplus

According to Bangladesh Bank data, the country's overall BOP recorded a surplus of $853 million in the first three months of the current fiscal year, compared to a deficit of $1.49 billion in the same period of the previous fiscal year.

A senior Bangladesh Bank official said that the improvement in the financial account was the main reason behind the overall BOP surplus. This indicates progress, as the overall BOP had shown a deficit during the same period last year.

Zahid Hussain said, "The situation is not as bad as before. However, the pace of progress going forward and whether it is sustainable remain questions."