Trade deficit widens as import slightly rises

The country’s trade deficit widened by 9.48% in the first eight months of the current fiscal year 2021-22 as the import payment rose slightly but export earnings fell, indicating a sluggish trend in the economy.

The deficit rose by $1.02 billion year-on-year to $11.79 billion during the July-February period in the current fiscal year, up from $10.77 billion in the period of the previous fiscal year, according to the latest data by the central bank.

Import growth rose by only 1.91% to $37.06 billion from $36.37 billion in the previous fiscal year, as per the Bangladesh Bank (BB) data.

The increasing trend of import growth will not sustain in the upcoming days owing to the present situation of the global Covid-19 pandemic, said a BB official.

Export growth contracted by 1.28% to $25.27 billion in the July-February period from $25.59 billion in the previous fiscal year.

Of the total export earnings during the period, readymade garment exports fell 3.73% to $21.03 billion.

Experts said that the signs are not good for the economy as the volume of exports and imports has been declining alarmingly since the last year.

But the country’s economy started to recover from the lacklustre situation created by the deadly virus since December, which has been reflected in the import growth.

But the future is very uncertain as the second wave of Covid-19 has hit several countries, including Bangladesh, they added

The country’s economy and businesses are going to face a disaster if the Covid-19 infection rate keeps increasing day by day, said Zahid Hussain, former lead economist of the World Bank Dhaka office.

The falling trend of export may increase further owing to the disruption of the supply chains as the government is going to impose a fresh countrywide lockdown from Monday, he added.

If we are not able to control the increasing infection rate of Covid-19, it will be a big concern for our country’s trade and economy, Hussain further said.

“We have to control the infection rate through strict rules and regulations and awareness, utilising the experience of last year,” the economist added.

The increasing trend of import payment pushed down the current account surplus despite higher growth of inward remittance.

The current account surplus stood at $1.55 billion in the eight months of FY21, which was a $2.10 billion deficit in the same period of the last fiscal year, the BB data showed. The surplus was $2.20 billion a month ago.            

The country’s net foreign direct investments (FDI) dropped 31.21% during the period.

The BB data also showed that Bangladesh attained $606 million net FDI in the first eight months of fiscal 2020-21 against $881 million a year earlier.