‘Fuel import costs’ push Bangladesh trade deficit up 29% in two months

Bangladesh has started the 2026-27 fiscal year with a substantial trade deficit following the trend of the previous financial year.

In the first two months of the current fiscal year (July–August), the overall goods trade deficit stood at $3.82 billion, up 29 percent from the same period last year.

Analysts attribute this widening gap primarily to an unusual surge in fuel oil import expenditure.

In the July–August period of the 2025–26 fiscal year, the trade deficit stood at $2.96 billion.

Three months have elapsed since the start of the 2026–27 financial year on Jul 1.

Bangladesh Bank released the balance of payments (BoP) data for the first two months of the fiscal year on Tuesday.

The figures show that Bangladeshi businesses imported goods worth $12.20 billion in July–August.

This marks a 12.1 percent increase compared with the same period in the previous fiscal year, when merchandise imports totalled $10.88 billion.

In contrast, exporters earned $8.38 billion from goods exports during July–August of the current fiscal year -- a 5.8 percent increase from the same period last year, when export earnings stood at $7.92 billion.

As a result, the overall merchandise trade deficit for the July–August period reached $3.82 billion.

During these two months, fuel oil import costs rose to $2.49 billion, doubling the expenditure incurred during the same period of the previous fiscal year -- an increase of more than 100 percent.

In July–August of the 2025–26 financial year, fuel oil imports totalled $1.24 billion.

No other category of imports saw such a steep increase.

In fact, import costs for several goods declined.

Imports of capital goods, such as machinery, factory equipment, and production tools used to produce other goods or services, fell by 20 percent while rice import costs dropped by 78.30 percent.

Towfiqul Islam Khan, senior research fellow at the private think-tank Centre for Policy Dialogue (CPD), told bdnews24.com that the widening trade gap was mainly driven by higher fuel import costs.

While fuel demand rises annually, causing moderate cost increases, global market dynamics have amplified the surge.

"Market volatility spiked after the outbreak of the war in West Asia on Feb 28, driving fuel prices up. That upward trend persists," he noted. "As a result, following last fiscal year's trend, fuel import expenses remain significantly higher in the current financial year."

Bangladesh closed the 2025–26 financial year with a massive trade deficit of $27.28 billion -- nearly 34 percent higher than the previous fiscal year and the third-highest deficit in the nation's history.

To curb import spending amid a foreign exchange shortage, the ousted Sheikh Hasina administration implemented several austerity measures, which yielded positive results by reining in import expenditure and narrowing the trade deficit for the 2023–24 fiscal year.

The interim government led by Nobel laureate Muhammad Yunus maintained a similar trajectory, leading to a downward trend in the trade deficit during 2024–25.

Central bank data show that the merchandise trade gap shrank by 9 percent to $20.45 billion in 2024–25, down from $22.43 billion in the preceding year.

In the 2022–23 fiscal year, the trade deficit stood at $27.38 billion, while in 2021–22 it reached an all-time high of $33.25 billion.