Chittagong port of Bangladesh
Dhaka, Bangladesh (BBN)- Bangladesh’s overall trade deficit widened further in the first eight months of the current fiscal year (FY) mainly due to higher import payments against lower export receipts, officials said.
The deficit rose by 92.67 per cent or $ 5.64 billion to $ 11.73 billion in the July-February period of FY 2017-18 from $ 6.09 billion during the same period of the previous fiscal, according to the latest data, released by the Bangladesh Bank (BB), the country’s central bank, on Sunday.
Talking to the BBN, a BB senior official said higher import expenses, particularly for rise in rice, fuel oils and industrial raw materials, pushed up the overall trade deficit significantly during the period under review.
The country’s overall import swelled by 26.22 per cent to $ 35.82 billion in the period under review of FY 18 from $ 28.38 billion during the same period of the previous fiscal, according to the official figures.
On the other hand, the overall export earnings grew by 8.06 per cent to $24.09 billion in the first eight months of FY 18 against $ 22.29 billion in the same period of the previous fiscal.
The overall trade deficit may widen further in the coming months if the falling trend in export earnings continues, the central banker explained.
In March 2018, export receipts stood at $ 3.05 billion, down by 1.38 per cent over the same month last year. The monthly target was, however, missed by 3.19 per cent. The monthly export target was $ 3.15 billion for the month of March 2018.
The BB data also showed that the deficit in service trade also increased to $ 2.96 billion in the first eight months of FY 18 which was $ 2.12 billion in the same period of the previous fiscal. Trade in services includes tourism, financial service and insurance.
“The overall import growth increased significantly in the recent months following implementation of different infrastructures along with mega projects in Bangladesh,” another BB official explained.
Currently, the government is implementing nine projects under a Fast Track Project Monitoring Committee, headed by Prime Minister Sheikh Hasina.
He also said the upward trend of import may continue in the coming months ahead of the Holy Ramadan.
Normally, a large quantity of essential commodities is imported to meet the additional demand of consumers during the month of Ramadan, the month of fasting.
Meanwhile, the higher trade deficit pushed further up the current-account deficit during the period under review despite an uptrend in inward remittances.
The country’s current-account deficit reached $ 6.32 billion during the July-February period of FY 18 against $ 963 million in the same period of the last fiscal year. It was $ 5.35 billion a month ago.
The inflow of remittance, however, increased by nearly 16 per cent to $ 9.25 billion in the first eight months of FY 18 from $ 8.0 billion in the same period of FY 17.
Meanwhile, the financial account recorded a surplus of $ 5.74 billion during the July-February period of FY 18 which was $ 2.96 billion in the same period of FY 17.
Higher inflow of medium- and long-term loans helped maintain a robust surplus in the financial account, according to the central bankers.
However, the gross inflow of foreign direct investment (FDI) increased by only 4.55 per cent to $ 2.27 billion during the July-February period of FY 18 from $ 2.18 billion in the same period of FY 17.
On the other hand, net FDI inflow rose by 0.80 per cent to $ 1.26 billion from $ 1.25 billion.
Bangladesh’s overall balance of payments (BoP) slid to a deficit of $ 978 million during the period under review, which was surplus of $ 2.45 billion in the same period of FY 17.
The BoP deficit was $ 354 million in the July-December period of FY 18. It was $ 360 million in the first quarter (Q1) of the current fiscal.
“The authorities concerned should take effective measures immediately for minimizing the possible pressure on the BoP,” Mustafa K Mujeri, former director general of Bangladesh Institute of Development Studies (BIDS), said.
The senior economist also recommended better monitoring of LCs (letters of credit) opening to help curb less productive imports.
BBN/SSR/AD