UK-Bangladesh trade hits record £4.7b in 2022
In a significant milestone in bilateral trade, the United Kingdom (UK) and Bangladesh witnessed a remarkable surge in trade volume, with the total trade reaching a record £4.7 billion ($5.83bn) in 2022.
The UK's Department for Business and Trade released these figures on Thursday, revealing a substantial increase of 50.4% compared to the previous year.
The trade balance heavily favoured Bangladesh, largely attributed to its thriving readymade garments (RMG) sector, which accounted for the lion's share of the trade. The UK's total imports from Bangladesh surged by 54.0% to £3.8 billion in 2022. At the same time, UK exports to Bangladesh increased by 36.7% to reach £897 million during the same period.
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Syedur Rahman Ranu, president of British Bangladesh Chamber of Commerce & Industry (BBCCI) told The Business Standard that bilateral ties with the UK have further strengthened in recent times, which is reflected in the trade volumes as well.
"Many countries are boosting business ties with Bangladesh because of the quality of products Bangladesh produces. Besides, the policies adopted by the Bangladesh government for international trade in the last 14 years are remarkable," he said.
Clothing emerged as the driving force behind this growth, representing a staggering £3.3 billion or 91.9% of all UK goods imported from Bangladesh. Among other top goods imported from Bangladesh were textile fabrics (£74.7 million or 2.1%), fish & shellfish (£45.7 million or 1.3%), mechanical power generators (£38.7 million or 1.1%), and road vehicles other than cars (£33.9 million or 1.0%).
On the flip side, the UK's top exports to Bangladesh featured metal ores & scrap, amounting to £317.2 million or 57.0% of all UK goods Bangladesh imported. Mechanical power generators (intermediate) followed closely behind, with exports valued at £32.5 million or 5.8%. Aircraft (£29.1 million or 5.2%), General industrial machinery (capital) (£23.3 million or 4.2%), and Electric motors (capital) (£22.4 million or 4.0%) completed the list of top exported goods.
Bangladesh's growing prominence in the UK's trade landscape is evident, with the nation becoming the UK's 50th largest trading partner in 2022. Accounting for 0.3% of total UK trade, which signifies the mutual benefits derived from their robust economic ties.
In addition to trade, foreign direct investment (FDI) between the two nations has also been noteworthy. In 2021, the UK's outward stock of FDI in Bangladesh reached a substantial £816 million, reflecting the confidence of British investors in the country's potential. However, due to data disclosure limitations, information regarding the inward stock of FDI from Bangladesh to the UK in 2021 remains unavailable, according to the UK's Department for Business and Trade.
In 2021, the total UK FDI abroad was £1.8 trillion. In 2021, the top destination for UK FDI was the United States, accounting for 26.1% of the total UK outward FDI stock, followed by Netherlands (8.8%) and Luxembourg (7.2%).
The total UK market share in Bangladesh was 1.1% in 2021 for goods and services. This is a decrease of 0.2% from 2020. The UK market share in Bangladesh was 0.8% in 2021 for goods only. This is an increase of 0.2% from 2020. The UK market share in Bangladesh was 2.6% in 2021 for services only. This is a decrease of 2.5% from 2020. In 2021, around 1,000 UK VAT-registered businesses exported goods to Bangladesh and around 1,100 UK VAT-registered businesses imported goods from Bangladesh.
Trend of trade increasing
According to the UK's Department for Business and Trade report, Bangladesh and UK's trade balance in 2013 was £2.4 billion. In 2014 it dropped to £2.2 billion and then increased again in the following two years to £2.6 billion and £2.9 billion respectively. In 2017, the trade value crossed the £3 mark to £3.6 billion. From 2018- 2021 the figures consistently stayed above £3 and were respectively £3.5 billion, £4.0 billion, £3.1 billion and £3.1 billion. In 2022 the trade volume saw a jump to hit a record of £4.7 billion.
A recent study by Research and Policy Integration for Development (RAPID) says that by 2030 UK apparel exports will be worth $4.5 billion. Meanwhile, exports of other products outside the apparel sector will increase from 0.7 billion to 1.3 billion dollars.
Economist Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh (PRI) said, "This growth would have been more prosperous if the political and economic conditions of Bangladesh had been better."
He added that initiatives to strengthen bilateral relations with other countries will further increase trade.
Commerce Minister Tipu Munshi told The Business Standard, "This growth is due to Bangladesh's contemporary export policies, bilateral relations and Bangladesh being debt friendly."
He expressed optimism that it will only continue to grow as the Bangladesh government has already signed several agreements with the UK.
"Once the agreements come into effect the growth trend will further go up," added the minister.
