Current Account Deficit Narrows by 93% in Jul-Sep

Economic Tag: Central Bank

Bangladesh’s current account deficit shrank by 93% in the first quarter of FY25, thanks to a significant increase in remittances. From August to October, remittances totaled $7.03 billion, up 43% from $4.9 billion in the same period last year. This surge is attributed to the change in government in August, contributing to a decrease in the current account deficit to $127 million, compared to $1.83 billion during the same period last fiscal year.

Additionally, the trade deficit decreased to $4.63 billion in Q1 FY25, down from $5.01 billion the previous year, reflecting a narrowing gap between exports and imports. However, economists caution that limited import growth could hinder economic growth by reducing investment and production.

On the financial front, the country’s financial account surplus reached $560 million, reversing a deficit from last year. Despite a 15% drop in foreign direct investment, improvements in trade financing and the US Federal Reserve’s rate cut have helped stabilize the financial account. However, concerns over a $2.05 billion negative balance in Errors and Omissions, possibly due to unaccounted dollar outflows, remain.

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