Current account deficit narrows on record remittances

The country’s current account deficit narrowed in the first 11 months of fiscal year 2025-26, helped by record remittance inflows, although weak economic activity continued to hold back trade and investment.

During the July-May period of FY26, the current account deficit stood at $301 million, down from $778 million in the same period of the previous fiscal year, according to the latest Bangladesh Bank (BB) data.

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The current account measures a country’s trade in goods and services, cross-border income flows, and current transfers such as remittances and foreign aid. It tracks the net flow of goods, services and income between a country and the rest of the world.

“Remittances played the biggest role in narrowing the current account deficit,” said Ashikur Rahman, principal economist of the Policy Research Institute of Bangladesh (PRI).

Remittance inflows reached a record $35.5 billion in FY26 as Bangladeshis staying abroad sent more money home. The inflow rose 17.3 percent year-on-year from $30.3 billion in FY25.

Ashikur said that, apart from remittances, neither exports nor imports performed particularly strongly, while investment also failed to recover during FY26.

During the July-May period of the recently concluded fiscal year, the trade deficit widened to $23.98 billion from $19.37 billion in the same period a year earlier, mainly because imports grew faster while export earnings declined, according to BB data.

Import payments reached $64.02 billion in the first 11 months of FY26, up 6.3 percent from $60.25 billion in the corresponding period of the previous fiscal year.

Export earnings, by contrast, fell 2 percent to $40.03 billion from $40.87 billion over the same period, according to the central bank data.

The PRI economist said subdued economic growth made the external sector appear stronger than it actually was.

“In reality, remittances were the only strong pillar, while almost all other indicators remained weak,” he added.

During the July-May period of FY26, the financial account, which records cross-border investment and other capital flows, returned to surplus as net financial inflows exceeded outflows. It recorded a surplus of $4.16 billion during the period, compared with a deficit of $214 million in the same period of FY25.

The financial account is a key component of the balance of payments. It records transactions involving financial assets and liabilities between residents and non-residents, including foreign direct investment, medium- and long-term loans, trade credit, net aid flows, portfolio investment and reserve assets.

The overall balance of payments also returned to surplus, reaching $4.01 billion in the first 11 months of FY26, compared with a deficit of $1.15 billion in the same period of the previous fiscal year.

The overall balance of payments (BoP) shows the net result of all transactions between a country and the rest of the world over a given period. It shows whether the country records an overall surplus or deficit after accounting for the current account, capital account, financial account, and errors and omissions.