Bangladesh's current account surplus with the European Union (EU) climbed to $23.08 billion in fiscal year (FY) 2023-24 riding on the back of robust exports to the 27-member economic bloc.
Net inflows from goods exports, mostly clothing items, to the EU states were recorded at $18.63 billion during the period, according to the latest report of the Bangladesh Bank released on Thursday.
The EU remains Bangladesh's largest trading bloc, consistently contributing to the country's trade surplus.
Additionally, Bangladesh posted trade surpluses with several other key regions and countries-$7.08 billion with the United States, $5.64 billion with the United Kingdom and $1.93 billion with other European nations.
However, the service sector with the EU registered a net deficit of $240 million, while the financial account showed a positive net inflow of $4.47 billion.
People familiar with the development told the FE that this big surplus with the EU primarily stems from the export of clothing and other goods to the bloc.
Remittance also played a significant role in the current account surplus. Remittance inflows from Bangladeshi workers in the EU during the period in question reached $4.93 billion, marking over 33-per cent rise from FY23.
The EU and Bangladesh maintain close ties under the EU-Bangladesh Cooperation Agreement, which was signed in 2001.
This accord facilitates cooperation in trade, economic development, human rights, governance and environmental issues, according to the European Commission.
As a World Trade Organisation (WTO) member since 1995, Bangladesh has benefited from the EU's 'Everything but Arms' (EBA) initiative that provides duty-free, quota-free access for all exportables except firearms.
The EU accounts for an estimated 20 per cent of Bangladesh's total external trade, with EU imports from Bangladesh dominated by clothing, which represents approximately 60 per cent of the market.
Bangladesh's apparel industry enjoys trade benefits of around 16 per cent through tariffs, which has maintained its competitive advantage over other nations.
However, economists warn that these preferential benefits will cease within three years following Bangladesh's graduation from its least-developed country (LDC) status.
Dr M Masrur Reaz, chairman and CEO of the Policy Exchange of Bangladesh, highlighted the urgency of enhancing competitiveness.
"We will lose both GSP [Generalised System of Preferences] and EBA benefits in the EU and other countries after graduation," he told the FE on Friday.
Economists view the EU as an irreplaceable trade partner of Bangladesh.
"The EU is like a golden goose for Bangladesh when considering trade benefits," said Dr Zahid Hussain, an independent economist.
He cautioned that Bangladesh would face significant challenges in retaining its market share in the EU after LDC graduation in 2026.
"We have to raise our efficiency to retain the market," emphasised Dr Hussain.
The noted economist advocated taking proactive measures to negotiate preferential trade agreements with the EU with an eye to mitigating the impact of losing EBA benefits.
"Securing GSP+ status will help Bangladesh maintain its foothold in the EU market," he added.
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