Korea–Bangladesh Trade Overview Through July 2022
Cumulative Korea–Bangladesh trade for January–July 2022 reached $998M, up 8.2% year on year. However, the strong growth momentum seen in the first half began to soften noticeably as the market entered the second half. As Bangladesh's foreign exchange crisis intensified, tighter restrictions on LC openings caused by dollar liquidity shortages started to take hold, pushing Korean imports onto a declining path.
July 2022 marks an important inflection point in Korea–Bangladesh trade for the year. The growth momentum visible since the beginning of the year clearly broke, signaling the start of a "downward phase." In the same month, Bangladesh was forced to cut energy imports such as fuel oil and LNG to defend its foreign exchange reserves, resulting in a compounding power shortage. Even amid this combined crisis, RMG exports remained resilient, continuing to serve as the backbone of the Bangladeshi economy.
Padma Bridge Opening: A Transformative Infrastructure Milestone
June 25, 2022 was a landmark day in Bangladesh's economic history. The opening of the 6.15 km Padma Bridge directly connected Dhaka with 21 districts in the southwest for the first time by road. This project, with total construction costs of $3.6B (with a multinational consortium including Korean participation), is the largest infrastructure project Bangladesh has completed with its own funding.
The Padma Bridge opening will also have a positive long-term impact on Korean companies' trade and investment. The accelerating economic development of the southwest region (Khulna, Rajshahi) will create demand for new industrial zones and logistics hubs, and Korean equipment and materials for infrastructure construction in this region are expected to see growing demand.
In-Depth Analysis of the Foreign Exchange Crisis Impact
Bangladesh's foreign exchange crisis in the second half of 2022 had a direct impact on the trade environment. As reserves fell from $40B in June to $38B in July, the central bank raised LC margin requirements for non-essential imports from 75% to 100%. This had an immediate negative effect on Korean exports of consumer goods and home appliances.
In particular, energy import restrictions in July began affecting Bangladeshi industrial production through power shortages (2–4 hours of daily outages). Disruptions to RMG factory production were feared, but in practice factories responded with backup generators, and garment exports were largely maintained without major damage.
| Month | Exports | MoM | YoY | Key Issue |
|---|---|---|---|---|
| January | $95M | - | +12.1% | Solid start to the year |
| February | $103M | +8.4% | +12.5% | Ukraine war erupts |
| March | $108M | +4.9% | +10.3% | Annual peak |
| April | $92M | -14.8% | +8.2% | LC delays begin |
| May | $83M | -9.8% | +3.5% | Restrictions tighten |
| June | $78M | -6.0% | -2.1% | LC 100% margin applied |
| July | $79M | +1.3% | -5.3% | FX crisis fully kicks in |
| July Cumulative | $638M | - | +9.5% | Growth slowing trend |
Trade Structure Shifts by Product: Essentials vs. Non-Essentials
The FX crisis produced a clear bifurcation in trade structure by product category. Bangladesh Bank classified raw materials for RMG exports (synthetic resins, synthetic fibers) and construction materials for national infrastructure (steel) as "essential imports" with priority LC approval. In contrast, machinery, electronics, and auto parts were grouped as "non-essential," subject to the 100% margin requirement, causing exports in these categories to contract sharply.
| Product | July Cumulative | Share | YoY | FX Crisis Impact |
|---|---|---|---|---|
| Synthetic Resins | $135M | 21.2% | +11.2% | Minimal (essential) |
| Steel Sheets | $121M | 19.0% | +9.8% | Minimal (infrastructure) |
| Synthetic Fiber/Textiles | $89M | 13.9% | +6.5% | Minor (RMG-linked) |
| Machinery | $68M | 10.7% | -8.4% | Moderate (non-essential) |
| Electronics/ICT Components | $61M | 9.6% | -5.2% | Moderate (non-essential) |
| Auto Parts | $25M | 3.9% | -14.2% | Severe (fully non-essential) |
| Others | $139M | 21.8% | +7.1% | Mixed |
ICT Export Constraints and the Digital Transformation Dilemma
Electronics and ICT component exports through July 2022 totaled $61M, down 5.2% year on year. This happened despite an increase in Bangladesh's ICT budget, because foreign exchange constraints delayed actual disbursements. A so-called clash of "digital transformation intent vs. FX reality" emerged. However, this is seen as temporary suppression, with a strong expected rebound after the IMF bailout.