Bangladesh’s import trade is showing signs of renewed momentum, with the opening of letters of credit (LCs) increasing by nearly 18 per cent in the first two months of the 2026–27 financial year. LC settlements also rose by more than 10 per cent, indicating an improvement in overall import activity.
According to the latest data from Bangladesh Bank, the growth was particularly strong in LCs opened for consumer goods. New LCs for capital machinery also increased. However, the overall picture remains mixed, as settlements for industrial raw materials and capital machinery declined despite growth in new LC openings.
During July and August of the current financial year, LCs worth US$13.94 billion were opened, compared with US$11.82 billion in the same period of the previous financial year. This represents an increase of US$2.118 billion, or 17.92 per cent, year on year.
Meanwhile, the total value of settled LCs reached US$12.466 billion during the first two months of FY2026–27, up from US$11.257 billion a year earlier. The increase amounted to US$1.209 billion, or 10.74 per cent.
People familiar with the sector attribute the improvement partly to higher remittance inflows and some easing of pressure on the foreign exchange market. During the previous government’s tenure, import restrictions were imposed on various products to reduce pressure on foreign exchange reserves. Subsequently, improved remittance inflows and some easing of the dollar shortage helped strengthen importers’ ability to open and settle LCs.
However, an increase in LC openings does not necessarily mean that all corresponding imports have been completed. Opening an LC initiates the import process, while settlement reflects the fulfilment of payment obligations. The two indicators therefore provide different perspectives on the pace of import activity.
Consumer Goods Lead Growth in LC Openings
Consumer goods recorded the strongest growth in new LC openings among the categories highlighted in the central bank’s data.
During July and August, LCs worth US$1.259 billion were opened for consumer goods imports, compared with US$1.003 billion in the corresponding period of the previous financial year. The increase was US$256 million, or 25.50 per cent.
Settlements in this category also increased, although at a slower rate. The value of settled LCs for consumer goods reached US$1.017 billion during the first two months of FY2026–27, up from US$923 million a year earlier.
This represents an increase of US$94 million, or 10.10 per cent.
The stronger growth in LC openings suggests increased activity among importers of consumer goods. Nevertheless, the slower rise in settlements indicates that the growth in new LCs has not been matched by an equivalent increase in completed payment transactions during the period.
Industrial Raw Material Imports Remain Almost Flat
LC openings for industrial raw materials recorded only marginal growth, indicating that activity in this segment remained broadly stable.
Importers opened LCs worth US$4.216 billion for industrial raw materials in July and August, compared with US$4.207 billion during the same period a year earlier. The increase was just US$9 million, or 0.21 per cent.
Settlements, however, declined. The value of settled LCs for industrial raw materials fell to US$3.802 billion from US$3.887 billion in the corresponding period of the previous financial year.
The decline amounted to US$85 million, or approximately 2.19 per cent.
Industrial raw materials are essential to manufacturing and production activities. The near-stagnation in new LC openings, alongside the decline in settlements, is therefore an important aspect of the overall import picture.
However, these figures alone are insufficient to establish whether industrial production has increased or decreased. A broader assessment would require additional information on factory output, demand, capacity utilisation and other relevant economic indicators.
Capital Machinery LC Openings Increase by 12.87%
Imports of capital machinery, which support industrialisation and production capacity, also recorded growth in new LC openings.
LCs worth US$357 million were opened for capital machinery imports during July and August, compared with US$317 million in the same period of the previous financial year. This represents an increase of US$40 million, or 12.87 per cent.
Settlements in this category moved in the opposite direction. The value of settled LCs for capital machinery stood at US$291 million during the first two months of FY2026–27, down from US$308 million a year earlier.
The decline amounted to US$17 million, or 5.52 per cent.
Capital machinery imports are closely associated with investment in industrial equipment and the expansion of production capacity. The rise in new LC openings may therefore signal stronger prospective demand for machinery. However, the fall in settlements indicates that the increase in new LCs has not yet translated into higher settlement volumes during the period under review.
Further data will be needed to determine whether the growth in LC openings leads to a sustained increase in machinery imports and investment.
Import Recovery Presents a Mixed Picture
Bangladesh Bank’s figures show that both LC openings and settlements increased across the import sector during the first two months of the current financial year. The pace of growth, however, varied considerably by product category.
Consumer goods recorded strong growth in both openings and settlements. Industrial raw materials saw only marginal growth in new LC openings, while settlements declined. Capital machinery followed a similar pattern, with openings rising but settlements falling.
These differences underline why LC openings alone cannot provide a complete picture of the country’s import recovery. Foreign currency availability, the ability to meet payment obligations, demand for industrial inputs and the pace of investment all remain important factors.
The latest figures point to renewed momentum in Bangladesh’s import activity. Whether this improvement can be sustained will depend, in part, on developments in the foreign exchange market and the extent to which growth in new LCs is reflected in subsequent settlements and completed imports.
