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Bangladesh: Balance and Terms of Trade
Country Study > Chapter 3 > The Economy > Foreign Trade > Balance and Terms of Trade


Bangladesh has had a negative trade balance since independence in 1971. In the mid-1980s, the annual pattern was for exports to cover only around 30 percent of the cost of imports. The country had a positive balance on nonfood agricultural production, because jute and ready-made garment exports eliminated the deficit in fibers, textiles, and garments.

One way the society has been able to turn its economic problems and overpopulation to some advantage is by exporting workers to wealthy, Islamic countries, chiefly in the Persian Gulf. The remittances from these workers have come to constitute one of Bangladesh's greatest sources of foreign exchange. In FY 1986 remittances were nearly US$575 million, covering 23.5 percent of import financing requirements and substantially exceeding the total receipts from jute, the chief export. The government maintained records only of new recruits working abroad each year -- a peak of 77,694 in 1985 -- but knowledgeable observers believed that possibly as many as 450,000 were overseas at any one time. Throughout the 1980s, more than a third went annually to Saudi Arabia with a peak of 39,350 new recruits in 1987 from assimilating with the local population or experiencing non-Bangladeshi ways of life. When they have returned to Bangladesh with savings and material acquisitions, they generally have had no difficulty fitting back into their society.

Other remittances have come from the more highly educated elite who are able to take advantage of educational resources at home or overseas and who advance to high positions in business, the professions, the civil service, or even the military. Some have gone abroad -- mostly to Britain, the United States, and Canada -- and many remit savings to relatives in Bangladesh. The government extends incentives to all expatriate Bangladeshis to send back some of their savings. They are granted a preferential exchange rate, and a portion of their remittances can be turned back into foreign currency for purchases from abroad.

Including remittances as a form of export revenue still left Bangladesh with a deficit ranging between US$1.5 billion and US$1.8 billion each year during the 1980s. Foreign aid was the essential element allowing Bangladesh to steer clear of a critical shortage of foreign exchange.

In FY 1986, the United States was the leading buyer of Bangladeshi exports, taking some 25 percent of the total. The American portion had increased from 16 percent the year before and 12 percent the year before that. The dynamic new element was readymade garments; the United States purchased over 80 percent of this new industry's production, adding to Bangladesh's traditional base of jute manufactures (mostly carpet backing) and seafood. The next biggest customer for Bangladesh (but with only 28 percent of the American volume) was Japan, which chiefly purchased frozen seafood. Other important customers in FY 1986 were Britain, Italy, Pakistan, Singapore, and Belgium. Trade with communist countries was also significant. Almost 10 percent of exports were under barter terms with the Soviet Union, China, Bulgaria, Hungary, and Czechoslovakia.

The list of suppliers to Bangladesh is eclectic. In FY 1986, Singapore was the leading supplier, with 14 percent of the total (up from 12 percent the previous year). Major supplies were petroleum and petroleum products and also vegetable oils and fats. Next was Japan, with 13 percent of the total, selling iron and steel, transportation equipment, and machinery. In third place was the United States with 8 percent (food grains and machinery), followed by South Korea (textiles), the United Arab Emirates (petroleum), India (textiles and machinery), West Germany (machinery and transportation equipment), China (assorted products), and Britain (machinery, equipment, and sugar products). Other major suppliers were Canada, Pakistan, Saudi Arabia, Malaysia, the Netherlands, and Iran.

Data as of September 1988

Last Updated: September 1988

Editor's Note: Country Studies included here were published between 1988 and 1998. The Country study for Bangladesh was first published in 1989. Where available, the data has been updated through 2008. The date at the bottom of each section will indicate the time period of the data. Information on some countries may no longer be up to date. See the "Research Completed" date at the beginning of each study on the Title Page or the "Data as of" date at the end of each section of text. This information is included due to its comprehensiveness and for historical purposes.

Note that current information from the CIA World Factbook, U.S. Department of State Background Notes, Australia's Department of Foreign Affairs and Trade Country Briefs, the UK's Foreign and Commonwealth Office's Country Profiles, and the World Bank can be found on

Bangladesh Main Page Country Studies Main Page

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