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India’s share in Bangladesh’s total trade has been on a downturn since April 2024 as import restrictions and a consumer-driven boycott of Indian-made products weigh amid a change of wind, sources say.
On the contrary, China’s share in Bangladesh’s trade has been on the up and up since then, according to data from Bangladesh Bureau of Statistics (BBS).
Meanwhile, the United States of America, traditionally the third-largest trading partner, moved one rung up to become Bangladesh’s second-largest trading partner in July 2024.
Historically, China had been Bangladesh’s top trading partner in total trade in goods, followed by India in the second place and the United States in third.
However, the latest data show a shift in this pattern-perceivably amid a change in politico-economic equations.
The US surpassed India to become Bangladesh’s second-largest trading partner in July in total merchandise trade, in what economists see as a significant development in trade dynamics, after maintaining the third position for seven months since December 2023.
The BBS statistics show that in March 2024, India accounted for 16.29 per cent of Bangladesh’s total import. This share of the import trade declined progressively over the subsequent months: April counting 13.69 per cent, May 13.51 per cent, June 11.08 per cent and July 11.81 per cent.
Conversely, China’s share in total import by Bangladesh expanded faster: April claiming 23.48 per cent, May 28.06 per cent, June 21.96 per cent and July 29.36 per cent.
The economic-partnership paradigm shift reflects Bangladesh’s evolving trade preferences, with an increase in reliance on imports from China and a growing trade partnership with the United States.
The official count also suggests that Bangladesh’s policy decisions and geopolitical factors are influencing trade flows.
Economists say stricter shift in consumer sentiment against Indian products, especially following the flawed January 2024 general election, plays its part in India’s declining trade share.
Meanwhile, rising economic-superpower China’s aggressive trade expansion and competitive pricing have strengthened its foothold on Bangladesh’s market.
They, however, feel that analysis is needed to determine whether this trend will continue and what implications it may have for Bangladesh trade policies and economic relations in the changed political context.
Dr M. Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh, notes that Chinese products are highly competitive, and Chinese entrepreneurs have been aggressively marketing their goods, particularly during this period of deflation in China.
“The Chinese economy is experiencing deflation as its domestic demand has slowed down,” he told The Financial Express. “In my view, Chinese products remain very competitive in this region, offering attractive prices.”
Dr Masrur thinks while political boycotts may impact finished products at the retail level, they do not significantly affect industrial imports.
Dr Khondaker Golam Moazzem, a prominent industrial economist, says Bangladesh’s investment climate has remained sluggish, largely due to political instability, including the student-led movement in July and August.
“In my opinion, overall imports were lower during this period,” Dr Moazzem, also research director of the CPD, the oldest private think-tank in Bangladesh, told the FE.
He said major global currencies had depreciated significantly at the time, which could have made Indian goods relatively more expensive compared to competing economies.
However, he feels that better political ties are needed to facilitate India’s trade with Bangladesh. “Political relationship is very much important.”
Dr Zahid Hussain, an independent economist, told FE that Bangladesh needs more time to analyse the trade data before drawing conclusions.
“We have to wait a few more months before we can make a definitive comment on Bangladesh’s trade shifts.”
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