Trade deficit widens to $7.5b in Jul-Oct as Ramadan imports rise
Imports reached $5.3 billion in October alone
Highlights:
- Deficit jumps nearly $2bn in a month, from $5.7bn in September
- Imports rise 5.5% year-on-year to $22.11bn in four months
- Exports total $14.5bn, widening the trade gap
- Import surge driven by Ramadan demand for essentials and fuel
- Food imports soar, including soybean oil, sugar, lentils and dates
- Current account posts $749m deficit despite higher remittances
- Financial account shows $2.1bn surplus on higher trade credit and loans
Bangladesh's trade deficit widened sharply to $7.5 billion in the first four months of the current fiscal year, driven by a surge in imports ahead of Ramadan.
Bangladesh Bank's latest balance of payments data shows the trade deficit rose by nearly $2 billion within a month, reaching $7.5 billion during July-October of FY26. Until September, the deficit stood at $5.7 billion.
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Trade balance is a key component of the balance of payments, reflecting the gap between a country's imports and exports over a given period.
Central bank figures show imports during the four months amounted to $22.11 billion, up 5.5% from the same period of the previous fiscal year.
Exports, meanwhile, stood at $14.5 billion, resulting in the widening trade gap.
In October alone, imports reached about $5.3 billion, a notable rise compared with most months over the past year, when imports generally remained below $5 billion.
A senior Bangladesh Bank official said the increase was largely driven by higher imports of petroleum and fertiliser, alongside a rise in shipments of essential commodities ahead of Ramadan.
"With Ramadan approaching, imports of daily necessities increased significantly, pushing up overall import payments during September and October," the official said.
Central bank data show demand typically rises during Ramadan for items such as soybean oil, sugar, lentils, chickpeas, peas and dates. To meet this demand, the opening of letters of credit increased sharply in September and October.
Compared with the same period last year, soybean oil imports rose 36%, sugar 11%, lentils 87%, chickpeas 27%, peas 294%, and dates 231%, according to Bangladesh Bank statistics.
At the same time, imports of petroleum and fertiliser increased by 50% and 25% respectively over the four-month period, compared with the previous fiscal year.
Current account remains in deficit
The widening trade gap also weighed on the current account balance, which posted a deficit of $749 million during July-October. In the same period of FY25, the deficit stood at $640 million.
Economists and central bank officials said the current account remained negative despite a strong rise in remittance inflows, mainly due to higher import payments.
The current account captures transactions related to goods and services trade, income from abroad and remittances sent by expatriates.
Data show remittance inflows rose to $10.1 billion during July-October, up from $8.9 billion in the same period last year. Despite an increase of more than $1 billion, the impact was offset by the expanding trade deficit.
Officials said the surge in imports was the principal factor behind the current account shortfall.
Financial account posts surplus
In contrast, Bangladesh's financial account recorded a surplus of more than $2.1 billion in the first four months of the fiscal year, largely due to higher trade credit and increased medium- and long-term borrowing.
Bangladesh Bank data show trade credit exceeded $1 billion during July–October, compared with a deficit of $450 million in the same period last year.
A senior central bank official said the improvement was also supported by rising medium- and long-term loans.
"Higher inflows from medium- and long-term borrowing have strengthened the financial account position," the official said.
Zahid Hussain, former lead economist at World Bank's Dhaka office, said the financial account had improved significantly due to increased trade credit and longer-term loans.
"As imports rise, credit financing also increases, leading to inflows in trade credit, which is usually an outflow," he said. "This has helped offset pressures from the widening trade deficit."
