Big collapse in exports: Foreign exchange inflows drop by $5 billion in a year

❐ BD Digest Desk

The country’s two main sources of foreign exchange earnings—merchandise exports and expatriate income—are now trending in opposite directions. While expatriate income has increased significantly, the large decline in export earnings has outweighed that positive impact. As a result, overall foreign exchange inflows into the country have fallen by about $5 billion, indicating renewed pressure on the macroeconomic environment.

According to Bangladesh Bank’s calculations, remittances to the country in the 12 months from March 2024 to February 2025 amounted to about $27.3 billion. In the next 12 months, that is, from March 2025 to February 2026, it increased to about $31.8 billion. The growth in one year was about $4.5 billion or 16 percent.

On the other hand, export earnings fell from $54.3 billion to $44.6 billion during the same period. This means that export earnings fell by about $9.7 billion in one year, which indicates a decline of about 18 percent. As a result, the total foreign exchange flow, including exports and remittances, fell from $81.6 billion to $76.4 billion.

Industry insiders say that US tariffs, weak demand in the European market and cautious stance of global buyers have reduced orders. At the same time, competing countries like China, Vietnam and India are increasing their market share by providing products at comparatively lower prices. As a result, Bangladeshi exporters are lagging behind in price competition.

Economists say that not only is global demand weakening, but domestic structural constraints are also accelerating the export decline. Uncertainty in energy supplies, rising production costs, high logistics costs, and limited product diversity have long undermined competitiveness. The ongoing conflict in the Middle East has increased volatility in energy markets, further increasing production costs and creating the risk of supply disruptions.

According to analysts, the current situation indicates structural weaknesses in the external balance. While remittance flows may provide temporary relief, if the downward trend in the export sector continues, pressure on foreign exchange reserves, the exchange rate, and import capacity may increase further.

In this context, it is now imperative to diversify export markets, reduce production costs, stabilize energy supplies, and strengthen trade diplomacy. Otherwise, this export collapse could become a major risk to the macroeconomic environment in the long run.

In March this year, remittances to the country reached about $3.75 billion, the highest in a single month. A growth of about 14 percent compared to the same month of the previous year. Banking sector officials say that the flow of expatriate income has increased due to exchange rate adjustments, incentives for legal channels, and increased controls on informal transactions.

However, according to economists, a large part of this is the formalization of previously informal flows—which is not a guarantee of sustainable growth.

The picture of the export sector is becoming increasingly worrying. According to the Export Promotion Bureau, the country’s exports of goods in March 2026 were about $3.48 billion, which was $4.25 billion in the same month of the previous year. This means that exports have decreased by about 18 percent in a year.

This downward trend has continued for 8 consecutive months. Total export earnings during the July-March period of the current 2025-26 fiscal year stood at about $35.39 billion, which is about 5 percent less than the same period of the previous fiscal year.

The country’s export structure is highly dependent on the ready-made garment sector. About 80 percent of the total export earnings come from this sector. However, a major contraction has been seen here in recent times. In March 2025, the income from ready-made garment exports was $3.45 billion, which decreased to $2.78 billion in March 2026. During this period, knitwear exports decreased by about 21 percent and woven garments by about 17 percent.