Every year presents a unique mix of challenges and opportunities, and 2025 is no different. For Bangladesh, it brings a host of challenges on the political and economic fronts, but also significant opportunities to propel the nation to new heights. The country is currently grappling with high inflation and financial sector turmoil. The autocratic regime of Sheikh Hasina, which was forced to step down on August 5 of last year due to a mass uprising led by students and youths, has left a legacy of economic distortion. The interim government is working diligently to rectify this, and while progress is not yet at the desired level, there is still a clear potential for growth in the near future.
Nevertheless, one apparent silver lining on the economic front is modest growth in external trade. The country's export of goods registered 6.80 per cent growth last year over the previous year. Official statistics showed that total export receipts stood at US$47.24 billion in 2024, which was $44.23 billion in 2023. Goods import, however, remained stagnant last year. Statistics available from Bangladesh Bank showed that imports of goods in the first 10 months of last year stood at $56.05 billion, which was $55.78 billion in 2023. The complete data on the annual imports of goods is yet to be available.
Interestingly, exports in goods in the second half of 2024 increased by 8 per cent to $24.53 billion against $22.71 billion in the first half of the same year. The first two months of the second half were marked by the anti-discrimination movement that led to the mass uprising and, finally, the fall of the Hasina regime. During the period, the country faced a series of unrest and violence that heavily disrupted the factory activities and movement of goods. Though normalcy returned in the next months, unrest in the ready-made garment (RMG) industry was hampering production. Statistics available from the Export Promotion Bureau (EPB) showed that exports of RMG increased by 13 per cent in the second half (July-December) of the last year over the same period of the previous year. What explains the surge in exports?
The movement of the exchange rate may be a significant factor in the surge of exports. The local currency against the US dollar depreciated by 1.67 per cent during July-November of the last year compared to the depreciation of 1.94 per cent in the same period of 2023. While this modest depreciation alone is insufficient to boost a double-digit growth of RMG exports, it may still have contributed positivelu. Another reason for the surge in exports may be strong output recovery during the last quarter of 2024 and higher delivery. RMG exports jumped by around 18 per cent in December last over the same month of 2023, indicating a potential impact of the exchange rate on exports.
The sluggish import of goods last year is mainly due to lower demand. Some big importers reduced their activities in the last half of 2024, slowing the overall import. The continuation of restrictive policy to discourage non-essential and luxury imports to ease pressure on foreign exchange reserves also contributed to slowing the flow of imports.
During the July-October period of last year, imports of food grains declined by 7.60 per cent in value terms. This decline, while seemingly significant, may not have a major impact on the overall food supply due to the country's surplus production. Imports of consumer goods dropped slightly by one per cent, while capital goods declined by 14 per cent during the period under review. Imports of intermediate goods, however, increased by 6.20 per cent. The overall imports in July-October posted a modest growth of 2 per cent, indicating the continuation of sluggishness. Once the import data for the last two months is available, it will be possible to get the entire picture of the annual import.
Besides the domestic factors, global geo-economic and geo-political development will also affect the country's exports and imports. As the whole world is waiting for the United States (US) President Donald Trump's tariff hike, it will be a key determinant for many countries to adjust their own trade policies. Trump, who will officially take charge of the Oval Office on January 20, is ready to increase tariffs on imports from China, Canada and Mexico by 25 per cent on average and the rest of the world by at least 10 per cent. His tariff hike will encourage many other countries to do so. This potential increase in tariffs could pose challenges for Bangladesh's exports, particularly to the US, and may necessitate a review of the country's trade policy. Moreover, the Russia-Ukraine war, coupled with Middle-East conflicts, has already made the future course of global trade costly and uncertain.
Given this complex global backdrop, it's clear that Bangladesh must urgently adjust its trade policy to bolster external trade. This adjustment is not just a future consideration, but a pressing need, especially as the country is on track to graduate from the Least Developed Country (LDC) status by the end of 2026.
So far, the trade in goods is the core focus of the country's trade policy, although the trade in services has also become critical. So, the scenario of trade in services also requires a quick review. Statistics available from Bangladesh Bank showed that export receipts in services trade increased by only 2 per cent in the first 10 months of the last year to $5.29 billion from $5.18 billion in 2023. At the same time, payments for services import stood at $9.14 billion in the January-October period of 2024, which was $8.09 billion in the same period of 2023. The 14 per cent jump in the imports of services reflects the sector's needs. In the year 2025, the country's trade policy adjustment needs to put more focus on trade in services.
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