Country’s trade deficit eased by 11.22 per cent in July-December in the current fiscal year (2018-19) compared with that in the same period of the last fiscal year (2017-18) amid slowdown in import growth and strong export earnings, especially from readymade garment sector.
According to latest Bangladesh Bank data, country’s trade deficit stood at $7.66 billion in July-December of FY19, down from $8.62 billion in the same period of FY18.
However, the country’s trade deficit in the first half of the current fiscal year still remained 69.84 per cent or $3.15 billion higher than the $4.51 billion trade deficit in July-December of FY17.
Officials of the central bank said that the country’s trade situation in the first half of the current fiscal year was in inverse relation to the situation in the same period last fiscal year.
In FY18, export growth was lenient against a strong import growth. On the other hand, export in the first half of FY19 showed strong growth while import growth was subdued.
Import and export growth was 25.76 per cent and 7.8 per cent respectively in July-December of FY18.
In the same period of the current fiscal year, import and export growth was 5.73 per cent and 14.01 per cent respectively.
Reduced pressure of food import was the main reason for the slowdown in import while US-China trade war helped Bangladesh’s RMG accelerate export in the US market, BB officials said.
’It’s a good sign that the export growth is in good shape,’ former interim government adviser AB Mirza Azizul Islam told New Age.
Considering the import dependency of Bangladesh economy, a fall in import is a negative sign, he said.
’Import of capital machinery fell by 15 per cent in July-December of FY18 and it again declined by another 5 per cent in the same period of FY19,’ he said.
Such decline in import of capital machinery would ultimately hamper investment at large, he said.
Mirza Aziz also said that it would not be possible to get rid of the stagnation in private sector investment as well.
’Emphasis should be on attaining higher export and remittance growth so that the current account deficit remains within the bearable limit,’ said Mirza Aziz, adding that focus should be on keeping import growth intact especially the import of capital machinery, raw materials and intermediate goods.
In July-December of FY19, the country’s export earnings increased to $20.16 billion from $17.67 billion in the first half of FY18.
RMG export grew by 15.65 per cent to $17.09 billion in the first six months against $14.77 billion in the same period of the previous fiscal year.
Import payments stood at $27.82 billion in July-December of FY19 while the figure was $26.31 billion.
Experts said that trade deficit still remained high.
Deficit in the overall balance, however, stood at $513 million in July-December of FY19 from that of $354 million in the same period of FY18.
In the period, the situation of current account balance also improved as the deficit dropped to $3.08 billion from $5.07 billion in the same period of last fiscal year due to a rise in remittance inflows.
The BB data showed that inflow of remittance increased by 9.26 per cent to $9.08 billion in July-January of FY19 compared with $8.31 billion in the same period of last financial year.
Besides, the net inflow of foreign direct investments in Bangladesh increased by 10.57 per cent to $910 million in July-January of FY19 from $823 million in the same period of FY18.