Bangladesh's trade deficit in the first five months of the current fiscal year was 20 percent, or $1.97 billion, lower than in the same period of the previous fiscal year.

During the July-November period of fiscal year (FY) 2024-25, the trade deficit -- the amount by which the cost of the country's imports exceeds the value of its exports -- stood at $7.88 billion.

It was $9.85 billion in the same period of FY24, according to the latest data from Bangladesh Bank.

The narrowing trade deficit has been attributed to a rise in export earnings coupled with a slight decline in import expenditure.

Export earnings increased by 10.1 percent year-on-year to $18.12 billion in the first five months of this fiscal year.

Meanwhile, import costs fell by 1.2 percent year-on-year to $26.01 billion.

This development, supported by an increase in remittance inflows over the past couple of months, has helped improve the country's balance of payments (BoP).

In other words, it has reduced the deficit in the country's current account balance, which is a measure of the overall cross-border money flow, whether through industrial activity, government fund transfers, or remittances.

From July to November, the deficit in the current account balance stood at $226 million.

The deficit had stood at $3.93 billion during the same period of the previous fiscal year.

In the first five months, the financial account remained negative.

The financial account, a component of the balance of payments, records claims on or liabilities to non-residents concerning financial assets. It includes components such as direct investment, portfolio investment, and reserve assets, broken down by sector.

However, the deficit in the financial account narrowed to $581 million from $811 million in the same period a year ago.

Industry insiders said major indicators of the BoP were turning positive due to the growing inflow of remittance and export earnings.

Since July of last year, remittance inflows have continued to grow. Bangladesh has received more than $2 billion in remittances each month since then.

Expatriate Bangladeshis sent home a record $26.9 billion in 2024, up 23 percent year-on-year.

Bankers are hopeful that the BoP will not face significant pressure in the coming days due to the rising trends in remittances and exports, the two main sources of foreign currency.

The overall deficit in the BoP stood at $2.47 billion during the July-November period of FY25, down from $4.89 billion in the same period of the previous fiscal year.