Remittance share in GDP, imports rises to 7-year high

Bangladesh's remittance sector achieved record growth in fiscal year (FY) 2024-25, with contributions to import payments and Gross Domestic Product (GDP) hitting the highest point in seven years.

Non-resident Bangladeshis and migrant workers sent $30 billion in FY25, marking the highest inflow on record in a fiscal year and a 27 percent year-on-year increase, according to a Bangladesh Bank report.

In the last fiscal year, remittances accounted for 6.57 percent of GDP and 47.13 percent of the country's import payments, highlighting their critical role in the economy. The share of remittances relative to exports also improved, reflecting the sector's growing significance in maintaining macroeconomic stability.

As per the BB report, the last quarter of FY25 (April-June) saw $8.54 billion in remittances entering the country, a 25 percent rise compared to the same period in the previous year.

"This strong performance in remittance receipts was driven by favourable and competitive exchange rate dynamics along with favourable policy measures, which may have incentivised higher transfers through official channels," the central bank said in its report.

It noted that the April-June quarter's growth was particularly significant as it reflected the post-Ramadan and Eid-ul-Fitr period, traditionally associated with heightened remittance flows, as well as the effects of ongoing policy measures undertaken by the government and Bangladesh Bank to encourage the use of official banking and digital platforms.

"Moreover, fluctuations in global oil prices, economic performance in Middle Eastern and Western economies, and exchange rate policies further influenced the volume and growth pattern of remittances during this period," it added.

During the quarter, the highest volume of remittances originated from Saudi Arabia, totaling $1.49 billion and accounting for 17.48 percent of total inflows. Remittances from Saudi Arabia were followed by $1.04 billion from the United Arab Emirates, and $1.003 billion from the United Kingdom.

However, citing data from the Bureau of Manpower, Employment and Training (BMET) in the April-May period, the BB report said the sharp decline in migration signalled structural vulnerabilities.

"Over-reliance on a few labour markets, like Saudi Arabia, raises policy risks that must be addressed through diversification."

Looking forward, the BB said the April-June quarter of FY25 highlighted the resilience of Bangladesh's remittance sector despite global uncertainties.

"While the upward trajectory of inflows offers immediate relief to external sector stability, strategic policy measures are needed to diversify migration destinations, reduce costs, and sustain growth in remittances without overreliance on fiscal incentives."

It said strengthening skill development programmes, expanding into non-traditional labour markets, and fostering digital remittance ecosystems will be crucial for ensuring sustainable gains in the years ahead.