Bangladesh's Trade Deficit Jumps 29% to $3.82 Billion as Fuel Imports Surge

Bangladesh's trade deficit widened by 29 percent year on year to $3.82 billion in July and August, the first two months of fiscal year 2026-27, as the country's import bill grew twice as fast as its export earnings. Exports rose a respectable 5.8 percent to $8.38 billion over the two months, but imports climbed 12.1 percent to $12.20 billion, according to figures released this week. The gap is up sharply from $2.96 billion in the same period last year, and it arrives at a moment when Bangladesh's external accounts are being pulled in two directions at once, a swelling fuel import bill on one side and remittances and a relatively steady currency on the other.

Petroleum Is Doing Most of the Damage

The single biggest driver of the wider gap is fuel. Petroleum imports more than doubled during the two months, climbing to $2.49 billion from roughly half that a year earlier, and former World Bank economist Zahid Hussain pointed directly at that number when asked to explain the jump. "Petroleum import expenditure increased by more than 115 percent," he said. "This was the main reason behind the 12 percent increase in import expenditure." That single line item now accounts for roughly a fifth of everything Bangladesh brought in from abroad over the two months, a sign of how closely the country's trade balance has become tied to global energy prices and to its own continued reliance on imported gas and oil to keep factories and power plants running.

The pattern was already visible in July alone, before August's figures were folded in. Data for that single month showed a trade deficit of $2.09 billion, sharply above the $1.51 billion recorded in July of the previous year, with imports up 8.6 percent and, more worryingly, exports actually down 1.6 percent for the month. Capital machinery imports, the equipment factories buy when they are expanding or upgrading production lines, fell 27 percent in July to $882 million, a trend economists flagged at the time as a signal that private investment was losing momentum rather than gaining it.

August Brought a Rebound, but Not Everywhere

What changed the picture between July and the full two month total was a stronger August. Garment exports, which still dominate Bangladesh's sales abroad, grew 5.3 percent over the two months to $7.49 billion, which means the sector had to post a considerably stronger month in August to pull the cumulative figure up from July's single month decline. That rebound helped total exports close the two months up 5.8 percent even though they had started the fiscal year in the red.

BD Financial Review's own tracking of September's single month trade figures showed the broader first quarter of fiscal 2026-27 running 6.34 percent ahead of the same period last year, with non-garment categories such as pharmaceuticals, jute, leather and home textiles growing faster in percentage terms than the dominant garment sector, even though garments still made up the bulk of total export value. That broader picture suggests the August rebound was not a one-off blip confined to knitwear and woven garments, but part of a wider, if still modest, pickup across several export categories heading into the new fiscal year.

Period	Exports	Imports	Trade Deficit
July-August, FY2025-26	$7.92 billion	$10.88 billion	$2.96 billion
July-August, FY2026-27	$8.38 billion	$12.20 billion	$3.82 billion
Year-on-year change	+5.8%	+12.1%	+29%

Remittances Are Carrying the Current Account, for Now

The trade figures alone would normally be read as uniformly bad news, but Bangladesh's broader current account tells a more mixed story. The current account surplus for the two months more than tripled compared with a year earlier, reaching $599 million, with remittance inflows surging almost 19 percent to $5.83 billion doing most of the heavy lifting. That is a notable turnaround from July on its own, when the current account surplus stood at just $64 million, itself down from $125 million in July of the prior year. The improvement between the two snapshots suggests August brought a meaningfully stronger month for remittances and the broader current account than July did, even as the trade gap kept widening underneath it.

Centre for Policy Dialogue economist Fahmida Khatun cautioned against reading the current account surplus as a sign that the external position is comfortably under control. "The financial account recorded a larger outflow, due to which the deficit widened," she said, pointing to the overall balance of payments rather than any single line item. July's data illustrated the same tension in miniature: even with the current account in surplus, outflows on the financial account pushed that month's overall balance of payments into a $633 million deficit, the kind of number that eats into foreign exchange reserves regardless of how healthy remittances look on their own.

What It Means for the Rest of the Fiscal Year

The widening deficit lands at a sensitive point in the fiscal calendar. The government is only two months into a year in which it has already flagged plans to lean more heavily on bond markets and bank borrowing to cover its own financing gaps, and a persistently wide trade deficit adds another claim on the same pool of foreign currency that is needed to service external debt and keep import financing lines open. Bankers who handle letters of credit for fuel and raw material imports say they are watching the fuel bill most closely of all, since a further run-up in global oil prices over the remaining ten months of the fiscal year would widen the gap further almost automatically, regardless of how well exports or remittances perform.

For now, the two month snapshot leaves policymakers with a familiar balancing act: exports and remittances are growing, which is good news on its face, but they are growing more slowly than the cost of keeping the country's factories and power grid supplied with imported fuel. Whether that gap narrows or keeps widening through the rest of fiscal year 2026-27 will depend heavily on global energy prices and on whether the capital machinery import slowdown seen in July was a blip or the start of a longer pullback in private investment.