Bangladesh’s Trade Transition, 2024–2026

Bangladesh entered 2026 with a familiar strength and a more urgent structural question. Ready-made garments remained the dominant export engine, supporting employment, foreign-exchange earnings and integration with European and North American retail chains. Yet recovering imports, weaker garment growth and a wider merchandise deficit showed why the next phase cannot rely on apparel volume alone. Bangladesh reports mainly by fiscal year, from July to June, and its customs and balance-of-payments series apply different valuation and coverage rules.

On the customs basis used in Bangladesh Bank’s July 2026 review, exports declined 4.3% in FY2024 to US$44.47 billion, while cost-insurance-freight imports fell 11.1% to US$66.72 billion. Turnover was US$111.19 billion. The simultaneous contraction reflected foreign-exchange constraints, subdued investment and consumption, and weaker external demand. Because imports fell more sharply, external pressure eased even though exports also declined.

FY2025 brought a partial reopening. Customs exports rose 8.6% to US$48.30 billion and imports 2.4% to US$68.35 billion, lifting turnover to US$116.65 billion. Knitwear exports were US$21.16 billion and woven garments US$18.18 billion. Together they generated roughly four-fifths of merchandise export receipts. That concentration provides scale and established buyer relationships, but also transmits retail demand, compliance requirements and tariff policy directly into the national balance.

The first ten months of FY2026, July 2025 to April 2026, were more difficult. Customs exports were US$39.79 billion, 1.1% below the corresponding period, while imports rose 5.9% to US$61.61 billion. Turnover reached US$101.40 billion before the year ended. The separate balance-of-payments series reported exports of US$36.02 billion, imports of US$58.23 billion and a US$22.21 billion trade deficit, compared with US$18.23 billion a year earlier. Customs flows and the external-account balance must not be combined.

Knitwear and woven garments represented 42.6% and 37.8% of July–April export receipts, while earnings fell 0.8% and 2.9%. Smaller categories moved in the opposite direction: engineering products rose 26.1%, leather 7.1%, chemicals 6.2%, plastics 5.6%, jute goods 3.9% and home textiles 3.2%. Their bases remain modest, but their direction matters because diversification reduces the effect of a downturn in one buyer market.

Imports also reveal the production cycle. Intermediate goods accounted for 62.2% of July–April imports and increased 8.8%, while capital goods represented 13.8% and rose 6.1%. Through May, total imports reached US$67.73 billion, up 5.9%; petroleum and capital machinery increased, while consumer goods declined. Some import growth therefore signals industry and investment, not consumption alone. Remittances of US$29.33 billion, up 19.5%, helped contain financing pressure, and reserves rose to US$35.10 billion in April 2026 from US$27.43 billion a year earlier.

World politics reaches Bangladesh through demand, market access, freight and energy. Bangladesh Bank identified reciprocal tariffs, geopolitical tension and softer demand in Europe and North America as export risks. Buyers can shift orders when tariffs alter relative prices, but scale, lead times, quality, labour governance and environmental traceability also drive sourcing. The IMF’s April 2026 outlook warned that conflict-related fuel and shipping costs could weaken growth and external balances in energy-importing Asian economies.

The policy response is not to abandon the garment advantage, but to deepen it while building complementary capabilities. Higher-value textiles, man-made fibres, design, product testing and circular production can increase value per order. Engineering products, leather, pharmaceuticals, agro-processing, digital services and light manufacturing can broaden earnings. Reliable energy, efficient port operations, predictable customs treatment, internationally recognised laboratory testing and certification, and transparent labour and environmental performance will be as important as trade diplomacy.

Bangladesh’s record describes a transition rather than a verdict. Exports recovered in FY2025 but softened during the available FY2026 period as imports and the deficit increased. Strong remittances and higher reserves improved the buffer. The durable test is whether proven manufacturing discipline can become a more diversified, energy-efficient and standards-ready export platform.