External sector holds steady, but growing risks ahead: GED

Strong remittance growth, stable reserve levels and rising investment-related imports leave Bangladesh’s external sector well-positioned to absorb moderate shocks and support overall macroeconomic stability in the near term, according to the General Economics Division (GED).

However, this resilience could be tested by a combination of external pressures, including escalating geopolitical tensions in the Middle East, volatility in global energy prices, and uncertainty surrounding global trade and growth, the government think-tank said in its June 2026 Economic Update and Outlook report.

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“Looking ahead, the external sector outlook remains cautiously optimistic but is subject to external uncertainties. The rebound in overall imports and the continued strength of capital machinery imports suggest improving domestic economic activity and investment prospects, although they may also increase demand for foreign exchange,” the report states.

The GED economic update says the country’s external position remained resilient during March-May, supported by sustained growth in remittances and exports despite persistent global economic and geopolitical headwinds.

It noted that remittance inflows remained significantly higher than in the corresponding period of the previous fiscal year, providing a steady source of foreign exchange and easing pressure on the balance of payments.

According to provisional central bank data, remittance inflows reached a record high of $35.5 billion in fiscal year 2025-26 as Bangladeshis working abroad sent more money home. The inflow grew 17.30 percent year-on-year from $30.3 billion in FY25.

The GED report also says that export earnings strengthened, driven by continued expansion in ready-made garment (RMG) exports alongside improved performance by non-RMG sectors.

According to Export Promotion Bureau (EPB) data, exports fell slightly in the last fiscal year, even though entrepreneurs recorded a 26 percent surge in shipments in June. The country shipped $4.2 billion worth of goods in June 2026, up from $3.33 billion a year ago. Prior to that, however, the sector witnessed eight consecutive months of decline as of March, before rebounding slightly in April.

Foreign exchange reserves also remained at comfortable levels despite a modest decline in May after recovering in April, notes GED.

Gross reserves rose from $34.12 billion in March to $35.11 billion in April before easing to $34.55 billion in May. Reserves calculated under the IMF’s BPM6 methodology followed a similar trend, increasing from $29.50 billion to $30.45 billion before declining to $29.84 billion in May.

The GED said the moderation reflected continued pressure from import payments and other external obligations rather than a deterioration in external liquidity, which it described as manageable.

The report, however, struck a more cautious note on what could unsettle that stability.

It warned that higher oil prices could increase import bills, putting additional pressure on foreign exchange reserves and the exchange rate.

At the same time, weaker global demand could dampen export growth, while continued instability in Gulf countries could affect overseas employment and future remittance inflows -- a risk with particular weight given how much of the remittance growth cited above is tied to Bangladeshi workers in the region.

In 2025, migrants from the Gulf Cooperation Council countries sent home $15.07 billion out of Bangladesh’s total remittance inflow of $32 billion, The Daily Star reported in May.

Despite these risks, the GED maintains a cautiously optimistic outlook, saying that Bangladesh’s current external buffers provide a solid foundation to withstand moderate global shocks.The report also said that continued growth in remittances, sustained export performance, prudent import management and stable external financing will be essential to preserving reserve adequacy and maintaining macroeconomic stability amid an increasingly uncertain global environment.