Published in The Daily Observer on Tuesday, 7 November 2017
Q1 Trade Deficit Crosses $3.7 Billion
Foreign currency reserves at $33 billion level
Trade deficit during first quarter (July-September) in the current financial year (FY) has widened to $3.7 billion, more than double over the corresponding period of the last fiscal due to higher import and slow export growth.
Despite pressurised current account overall foreign exchange reserve is in comfort level that is supported by positive financial account. The reserves stands around over $32.8 billion as of on Monday.
Bangladesh Bank (BB) in its latest statistics, revealed on Monday that trade deficit in the first three months of the current fiscal has reached to $3.7 billion as the country’s total import was $12.2 billion and export was $8.5 billion during the period.
It said in current account the deficit narrowed to $1.8 billion due to remittance and other secondary incomes and in this period both service and primary income performed into negativity.
Professor Mustafizur Rahman, renowned economist and former executive director of the Centre for Policy Dialogue (CPD) while talking with The Daily Observer said: “It is not the time to be worried at the negative trade balance, as import is increasing due to picking up of economy.” However, he said in the same time export growth is not happening as per projection to earn $50 billion from apparel sector by 2021.
He said: “Trade gap is always negative in Bangladesh, as it is an impost-based country, but the trade gap of the quarter under review is higher than any other time. In the coming quarters it may improve as the increasing credit disbursements encouraging entrepreneurs to import more machineries and raw materials for industrialization and its result may happen at the end of the current fiscal.”
Rahman also a fellow of the CPD said in financial account the balance of payment status is positive due to rising portfolio, foreign aid and grant and foreign direct investments. He suggested for monitoring the local currency exchange rates which is already showing positive in favour remitters and exporters.
The Bangladesh central bank data also shows trade deficit during first quarter of the last fiscal was $1.6 billion and during July-August the amount furthers dropped to $1.8 billion and as per the latest statistics it is more than $3.7 billion.
A senior BB official told to The Daily Observer that due to recent flash flood Bangladesh has to import grains and as the government is encouraging private sector to boost power generation the power sector needs capital machinery, enlarging the import basket.