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Current account returns to surplus after 8 years
Bangladesh’s current account balance returned to surplus in the fiscal year 2024–25 for the first time in eight years, driven by a surge in remittance inflows and export earnings, alongside sluggish import growth reflecting weak investment demand...
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Current account returns to surplus after 8 years
High dollar inflows, sluggish investments drive turnaround
Mostafizur Rahman 03 August, 2025, 00:37
Bangladesh’s current account balance returned to surplus in the fiscal year 2024–25 for the first time in eight years, driven by a surge in remittance inflows and export earnings, alongside sluggish import growth reflecting weak investment demand.
According to the latest data from the Bangladesh Bank, the current account posted a surplus of $981 million in FY25, a dramatic turnaround from the $6.6 billion deficit recorded in FY24.
The last time the country saw a current account surplus in FY16, when it stood at $4.26 billion. Since then, persistent deficits continued for eight consecutive fiscal years until this reversal.
This shift comes as a major relief for the country’s external sector, which has faced persistent deficits, dwindling foreign reserves, and volatility in exchange rates over recent years.
The current account is a vital part of a country’s balance of payments (BoP), reflecting the net flow of goods, services, primary income (such as interest and dividends), and secondary income (mainly remittances).
As a result of these developments, the overall balance of payments turned to a surplus of $3.6 billion in FY25 after three straight years of deficits. In FY21, the BoP was in surplus by $9.27 billion, but then shifted into deficit in subsequent three years years - $6.6 billion deficit in FY22, $8.22 billion in FY23, and $4.3 billion in FY24.
‘This improvement was driven mainly by the return of the current account balance to a surplus from a large deficit. A surge in remittance inflows and robust export earnings in tandem with sluggish imports contributed to the reversal of the current account balance to a surplus of $981 million in FY25,’ according to BB’s new monetary policy statement.
The pressure on the external sector had broadly stabilised in FY25, supported mainly by flexibility in exchange rates, a balanced policy-mix of tight monetary policy and budget retrenchment, inflow of foreign assistances, a surge in remittance inflows, and a robust export growth, it said.
Selim Raihan, executive director of the South Asian Network on Economic Modeling (SANEM), said the improvement in the current account balance is certainly a positive development.
He noted that the surplus was primarily driven by a sharp rise in remittance inflows and export earnings, along with weak import growth. However, he cautioned that the subdued import growth is not necessarily good news, as it signals sluggish private sector investment.
He pointed out that low investment activity reflects underlying concerns in the economy, including global trade uncertainties, domestic political instability, and a deteriorating law and order situation. These factors, acting together, have discouraged businesses from investing and expanding.
Raihan said, ‘If we achieve a surplus while private investment is strong and the economy is vibrant, that would be a much more positive scenario,’ he said.
In FY25, the improvement in current account came primarily from a surge in secondary income, which includes remittances sent by Bangladeshi workers abroad.
Remittance inflows jumped by nearly 27 per cent to $30.33 billion in FY25 from $23.92 billion in the previous fiscal year.
Overall secondary income rose to $31.43 billion, up from $24.55 billion in FY24.
Export earnings also contributed positively, growing by 8.6 per cent year-on-year to reach $48.3 billion in FY25.
Although import payments increased slightly by 2.4 per cent, the trade deficit narrowed to $20.5 billion from $22.4 billion a year earlier.
Moreover, the deficit in services trade shrank to $3 billion, down from $3.81 billion in FY24, reflecting better performance in sectors like IT services and transport.
On the downside, the primary income account remained in deficit, which widened modestly to $4.97 billion in FY25 from $4.82 billion in FY24.
Despite the gains in current account and exports, the financial account of the BoP posted a smaller surplus of $3.2 billion in FY25, compared with $4.55 billion in FY24.
As of July 24, 2025, the country’s foreign exchange reserves stood at $25 billion, based on the IMF’s updated calculation methodology.
High dollar inflows, sluggish investments drive turnaround
Mostafizur Rahman 03 August, 2025, 00:37
Bangladesh’s current account balance returned to surplus in the fiscal year 2024–25 for the first time in eight years, driven by a surge in remittance inflows and export earnings, alongside sluggish import growth reflecting weak investment demand.
According to the latest data from the Bangladesh Bank, the current account posted a surplus of $981 million in FY25, a dramatic turnaround from the $6.6 billion deficit recorded in FY24.
The last time the country saw a current account surplus in FY16, when it stood at $4.26 billion. Since then, persistent deficits continued for eight consecutive fiscal years until this reversal.
This shift comes as a major relief for the country’s external sector, which has faced persistent deficits, dwindling foreign reserves, and volatility in exchange rates over recent years.
The current account is a vital part of a country’s balance of payments (BoP), reflecting the net flow of goods, services, primary income (such as interest and dividends), and secondary income (mainly remittances).
As a result of these developments, the overall balance of payments turned to a surplus of $3.6 billion in FY25 after three straight years of deficits. In FY21, the BoP was in surplus by $9.27 billion, but then shifted into deficit in subsequent three years years - $6.6 billion deficit in FY22, $8.22 billion in FY23, and $4.3 billion in FY24.
‘This improvement was driven mainly by the return of the current account balance to a surplus from a large deficit. A surge in remittance inflows and robust export earnings in tandem with sluggish imports contributed to the reversal of the current account balance to a surplus of $981 million in FY25,’ according to BB’s new monetary policy statement.
The pressure on the external sector had broadly stabilised in FY25, supported mainly by flexibility in exchange rates, a balanced policy-mix of tight monetary policy and budget retrenchment, inflow of foreign assistances, a surge in remittance inflows, and a robust export growth, it said.
Selim Raihan, executive director of the South Asian Network on Economic Modeling (SANEM), said the improvement in the current account balance is certainly a positive development.
He noted that the surplus was primarily driven by a sharp rise in remittance inflows and export earnings, along with weak import growth. However, he cautioned that the subdued import growth is not necessarily good news, as it signals sluggish private sector investment.
He pointed out that low investment activity reflects underlying concerns in the economy, including global trade uncertainties, domestic political instability, and a deteriorating law and order situation. These factors, acting together, have discouraged businesses from investing and expanding.
Raihan said, ‘If we achieve a surplus while private investment is strong and the economy is vibrant, that would be a much more positive scenario,’ he said.
In FY25, the improvement in current account came primarily from a surge in secondary income, which includes remittances sent by Bangladeshi workers abroad.
Remittance inflows jumped by nearly 27 per cent to $30.33 billion in FY25 from $23.92 billion in the previous fiscal year.
Overall secondary income rose to $31.43 billion, up from $24.55 billion in FY24.
Export earnings also contributed positively, growing by 8.6 per cent year-on-year to reach $48.3 billion in FY25.
Although import payments increased slightly by 2.4 per cent, the trade deficit narrowed to $20.5 billion from $22.4 billion a year earlier.
Moreover, the deficit in services trade shrank to $3 billion, down from $3.81 billion in FY24, reflecting better performance in sectors like IT services and transport.
On the downside, the primary income account remained in deficit, which widened modestly to $4.97 billion in FY25 from $4.82 billion in FY24.
Despite the gains in current account and exports, the financial account of the BoP posted a smaller surplus of $3.2 billion in FY25, compared with $4.55 billion in FY24.
As of July 24, 2025, the country’s foreign exchange reserves stood at $25 billion, based on the IMF’s updated calculation methodology.
