Published in Dhaka Tribune on Tuesday, 9 September 2014.
Trade deficit widens as import volume grows
Ibrahim Hossain Ovi
‘Trade deficit grew in line with the rise in import volume, particularly because of higher import of food items’
The country’s overall trade deficit widened further by 48.5% to $10.5 billion in the last fiscal, according to the Bangladesh Bank data. The higher import payments versus the lower export earnings contributed to the factor.
The Bangladesh Bank (BB) data said in the last fiscal the traded gap rose to $10.5 billion which was over $7 billion in 2012-13 fiscal.
In FY 2013-14, Bangladesh imported products and machinery worth $40.67 billion, while the country earned $30.17 billion, Bangladesh Bank and Export Promotion Bureau data showed.
In FY 2012-13, the country’s trade deficit came down to $7 billion from $11.22 billion in FY 2011-12. Experts and businessmen opined that new investments especially in RMG and safety issues led to the rise of import volume.
“Trade deficit grew in line with the rise in import volume, particularly because of higher import of food items,” Zaid Bakht, research director at Bangladesh Institute of Development Studies told the Dhaka Tribune.
The import of machinery increased in the last fiscal due to political stability in the country, which was rather slow in the previous FY due to political turmoil, said Zaid.
Though the import value increased showing sharp rise in the trade deficit, the export earning was good, he added.
Seeking anonymity, a Bangladesh Bank official said: “The import value will continue to enhance in the upcoming months, if the current business environment prevails in the country.”
A good number of businessmen are making fresh investment in the country especially in the RMG sector, which would lead the import to move up, he added.
“Industrial raw materials and machinery import led to a higher trade deficit, but there is nothing to be worried as there were production-oriented imports, which would add value to export box, said Mustafizur Rahman, executive director, Centre for Policy Dialogue (CPD).
On the other hand the current balance as well as reserve is in good position, he said. “But we have to focus the export as it has depicted slow growth in the last two month.”