Remittance inflow stays below $3 billion for second month urges protecting Bangladesh’s remittance lifeline amid global uncertainty

Remittances are one of Bangladesh's largest sources of foreign income, accounting for approximately 35–40% of the country's total foreign exchange earnings and contributing around 7% of its GDP, which portrays remittances as a blessing for Bangladesh because they provide a steady inflow of foreign currency.

On the other hand, the country's heavy reliance on remittances means that they constitute a significant share of its foreign earnings. As a result, any decline in remittance inflows can slow down and destabilise Bangladesh's external sector. The news published in The Daily Star on 3 August, titled "Remittance inflow stays below $3b for second month," has therefore raised concerns about the future stability of Bangladesh's remittance inflows.

Although remittance inflows increased by 15% year-on-year in July 2026, reaching $2.86 billion, the figure remained below the $3 billion mark for the second consecutive month. At first glance, this may not appear alarming. However, when viewed alongside declining export earnings, rising import costs, and increasing foreign debt repayments, the slowdown raises important concerns about the country's external economic stability.

Over the past decade, remittances have become far more than household income. They have emerged as a pillar of Bangladesh's macroeconomic resilience. In FY2025–26, expatriate Bangladeshis sent a record $35.5 billion, providing vital support for foreign exchange reserves, exchange rate stability, and the financing of imports. Unlike foreign loans or portfolio investment, remittances do not create debt obligations and therefore remain one of the safest sources of foreign currency.

The recent slowdown comes at a particularly difficult time. Bangladesh's imports increased by over 6%, driven mainly by higher fuel and fertiliser prices, while exports declined by 2% during the same period. This widening imbalance places additional pressure on the country's foreign exchange reserves. When export earnings weaken, remittances become even more critical for financing imports and reducing the current account deficit. A sustained decline would weaken the taka, increase the cost of imports, and ultimately fuel inflation that directly affects ordinary citizens.

The reasons behind this decline can be looked through three factors. Firstly, Malaysia's restrictions on the recruitment of Bangladeshi workers over the past four years have significantly reduced overseas employment opportunities in one of Bangladesh's major labour markets. As fewer workers migrate abroad, the future flow of remittances is likely to weaken.

Secondly, the ongoing conflict in the Middle East due to the Israel-Iran war has disrupted regional economic activities, particularly in sectors such as construction, hospitality, and services, where a large number of Bangladeshi migrant workers are employed. Rising living costs, business disruptions, and reduced employment opportunities have limited migrants' ability to send money home.

Thirdly, increasingly restrictive immigration policies, tighter visa regulations, and growing negative perceptions towards migrants from countries such as Bangladesh and India in developed destinations, including the United Kingdom and the United States, have created additional barriers to overseas employment. These challenges have reduced the number of new migrants while making it more difficult for existing workers to secure stable jobs and higher incomes. Collectively, these developments threaten the sustainability of Bangladesh's remittance earnings, placing greater pressure on foreign exchange reserves, exchange rate stability, and the country's overall external economic resilience.

To address the recent slowdown in remittance inflows, Bangladesh needs to adopt a long-term and diversified migration strategy rather than relying heavily on traditional labour markets.

First and foremost, the government should actively diversify overseas labour markets by expanding skilled labour migration to East Asian and African countries. As competition for foreign employment continues to increase, particularly from countries such as China and India, Bangladesh must explore emerging destinations where demand for skilled professionals is growing. Strengthening bilateral labour agreements and economic diplomacy with these regions can create new employment opportunities for Bangladeshi workers.

Moreover, Bangladesh must shift its focus from exporting predominantly low-skilled workers to producing a larger pool of skilled and semi-skilled professionals. Greater investment in technical education, vocational training, language proficiency, and internationally recognised certifications would enable Bangladeshi workers to secure higher-paying jobs abroad. The experience of countries such as the Philippines, which has gradually transformed its overseas workforce from mainly low-skilled to highly skilled professionals, demonstrates that investing in human capital can significantly increase both workers' earnings and national remittance income.The income potential associated with this skills gap is reflected in remittance per worker: IOM data cited in comparative reporting showed that a Bangladeshi migrant remitted an average of about US$203.33 per month, compared with US$564.10 for a Filipino migrant, a difference of approximately US$360.77 per month. In other words, the average Filipino migrant remitted roughly 2.8 times as much as the average Bangladeshi migrant

Additionally, Bangladesh should strengthen pre-departure orientation and intercultural training for migrant workers. Besides technical skills, workers should be equipped with language abilities, knowledge of local laws, workplace ethics, and cultural awareness to help them integrate smoothly into host societies. Better adaptation to different cultural and professional environments can improve job retention, reduce workplace disputes, and enhance the reputation of Bangladeshi workers in the international labour market.

Implementing these measures would not only strengthen Bangladesh's remittance earnings but also make the country's overseas employment sector more resilient, competitive, and sustainable amid changing global labour market conditions.

Sumaia Nourin is a student of International Relations at BUP and Campus Ambassador of Future Nation under UNDP and an associate of the Safe Migration team in the Youth Policy Forum

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.