Korea–Bangladesh Trade Overview Through August 2022
Cumulative Korea–Bangladesh trade for January–August 2022 reached $1,120M, up only 6.8% year on year. Growth has been steadily declining from the 11.5% pace seen in H1, as the impact of Bangladesh's foreign exchange crisis becomes increasingly pronounced. August monthly exports fell to $72M, the year's lowest figure, and tightening LC restrictions are directly hitting the profitability of Korean exporters.
August 2022 represents the "peak of the FX crisis" for Korea–Bangladesh trade. As Bangladesh's foreign exchange reserves fell to $36B, the central bank effectively moved to full control over import LC issuance. From this point, a gradual stabilization began with the opening of IMF negotiations in September — making August the benchmark low (bottom) for trade.
FX Crisis Progression: January Through August
Bangladesh's 2022 foreign exchange crisis deepened not linearly but through a compounding series of shocks. The sequence was: Ukraine war (February) → energy import cost surge (March–April) → accelerating FX reserve depletion (May–June) → full LC controls (July–August). The Bangladeshi government officially applied to the IMF for bailout support at end-July, with approximately $4.7B in negotiations concentrated in the September–November period.
| Period | FX Reserves | LC Margin Rate | Key Measures | Export Impact |
|---|---|---|---|---|
| Jan–Mar | $44–46B | 75% | Normal operations | No material impact |
| Apr–May | $40–42B | 75→100% | LC delays begin | Mild decline |
| Jun–Jul | $38–40B | 100% | Non-essential imports restricted | Clear downturn |
| August | $36B | 100%+ | Full controls tightened | Year-low $72M |
| Sep–Oct | $34–36B | 100% | IMF talks launched | Modest rebound |
| Nov–Dec | $33–34B | Easing considered | IMF deal imminent | RMG peak season |
January–August Monthly Export Trend
Exports that started at $95M in January 2022 peaked at $108M in March and then fell continuously to a year-low of $72M in August. The 8-month cumulative total is $710M, but August alone was down 12.2% year on year — the first double-digit year-on-year decline since 2019.
| Month | Exports | MoM | YoY | FX Reserves |
|---|---|---|---|---|
| January | $95M | - | +12.1% | $46B |
| February | $103M | +8.4% | +12.5% | $45B |
| March | $108M | +4.9% | +10.3% | $44B |
| April | $92M | -14.8% | +8.2% | $42B |
| May | $83M | -9.8% | +3.5% | $41B |
| June | $78M | -6.0% | -2.1% | $40B |
| July | $79M | +1.3% | -5.3% | $38B |
| August | $72M | -8.9% | -12.2% | $36B |
| Cumulative | $710M | - | +7.1% | - |
Sector-by-Sector Impact Analysis
The FX crisis impact has been differentiated by sector. Raw materials for the RMG industry have seen relatively limited impact because the Bangladesh government is prioritizing LC approvals to protect the export industry, but other industrial goods and consumer items are taking serious hits. Electronics and machinery in particular are classified as "non-essential," effectively blocking LC openings and generating a wave of order cancellations.
| Product | Aug Cumulative | YoY | Crisis Impact |
|---|---|---|---|
| Synthetic Resins | $148M | -5.2% | Low (RMG essential) |
| Steel Sheets | $134M | -3.1% | Low (infrastructure essential) |
| Synthetic Fiber/Textiles | $98M | -7.8% | Low–Medium |
| Machinery | $72M | -22.4% | High (non-essential) |
| Electronics/ICT Components | $68M | -17.9% | High (non-essential) |
| Chemical Products | $42M | -25.1% | Very High |
| Auto Parts | $25M | -31.2% | Very High |
| Others | $123M | +2.3% | Mixed |
ICT and Electronics: Collision of Digital Transformation Demand and FX Constraints
The Bangladesh government increased digital transformation budgets in 2022, yet actual ICT equipment imports fell 17.9% due to the FX crisis. This is a structural dilemma: even with budget allocated, imports cannot proceed without dollars. Private-sector ICT investment was almost entirely frozen by the FX crisis, while central government ICT projects (Hi-Tech Parks, e-government) managed to survive through priority FX allocation.