The increasing trade deficit has hit a significant landmark at the beginning of the new fiscal year. The deficit exceeded $2 billion within the first two months of the fiscal year, which is 20 percent higher than in the same period last year. The import of equipment needed for big projects has caused the deficit in trade, said economic researcher Ahsan Mansur. The hike in global oil prices has also contributed to the trade deficit, he added.
According to information published by the Bangladesh Bank in July and August, Bangladesh suffered a total deficit of $ 2.1 billion in the trade of goods.
The trade deficit was $1.76 billion during the same period in 2017-18 fiscal year. The total deficit in the previous fiscal year was $ 18.25 billion.
>> Bangladesh imported goods worth $8.82 billion from July-August in the 2018-19 fiscal year. It earned $6.71 billion from exports during the same period.
>> The overall trade deficit in goods is $ 2.1 billion
>> But the service trade deficit during the same period decreased from $740 million in the previous fiscal year to $390 million to this fiscal year.
The current foreign transaction balance deficit in the July-August period of the current fiscal year is $60 million.
In general, a countrys foreign trade is calculated through the current account. The account subtracts the amount spent on imports from the amount earned from exports, as well as other regular transactions to calculate the current account balance. If there is a deficit in the account, the country needs to borrow to meet its expenditure.
However, increasing foreign investment and aid has improved Bangladeshs capital account balance in the first two months of the current fiscal year.
The capital account surplus in the July-August period for the current fiscal year is $470 million compared to $400 million during the same period in the last fiscal year.
Bangladesh received $440 million in Foreign Direct Investment in July-August in the previous fiscal year. This increased by 7.87 percent to $480 million in the same period in this fiscal year.
Approximately $550 million entering the country as middle and long-term loans, which is 12.24 percent higher than in the same period in the previous fiscal year.
Imports increased more than 25 percent in the last fiscal year, a trend that has continued into the first two months of the current fiscal year, Ahsan Mansur, executive director in Policy Research Institute told bdnews24.com.
The import of equipment for big projects such as the Rooppur Nuclear Power Plant has caused imports to jump, he said. Imports of rice, fuel, capital machineries, and industrial raw materials also contributed, he said.
Usually the increase in imports is considered a positive sign for the economy but Mansur suggested the government needs to be aware of money laundering under the guise of imports as the election looms at the end of the year.