Bangladesh's trade deficit has narrowed by 11% in the first six months of the current fiscal year (FY2018-19), owing to a rise of exports and a slowdown of imports, according to central bank data.
At the end of December 2018, trade deficit stood at $7.66 billion, down from $8.62 billion in the same period of the previous year.
During this six-month period, export earnings rose by 14.01% to $20.16 billion from $17.69 billion, while import payments rose by 5.73% to $27.82 billion from $26.31 billion during the same period of the previous fiscal year (FY2017-18), according to latest data by the Bangladesh Bank.
While unveiling the monetary policy statement (MPS) for the second half of FY2018-19, the central bank projected that merchandise trade gap may reach $17.27 billion in the current fiscal year, down from $18.26 billion in FY2017-18.
According to the MPS, the FY2017-18 current account dynamics was dominated by strong import growth at over 25%.
The statement reads that current account deficit is moderating, driven by lower import growth and strong export performance and remittance inflows.
For FY2018-19, Bangladesh Bank projects export growth at 14%, remittance growth at around 11% and import growth at 7.5%.
Speaking to the Dhaka Tribune, AB Mirza Azizul Islam, a former adviser to the caretaker government said that the "slight" increase in exports is a "positive sign".
"On the other hand, import payments rose by only 5.73%, which does not carry a good message," he explained, adding that the import of capital machinery has recently declined, which will "not support the country's industrial sector".
"Private sector investment needs to be increased since our investment is stagnant," Islam furthered.
Southeast Bank Managing Director M Kamal Hossain said: “Traders have not imported much due to the uncertainty posed by the 11th parliamentary elections held on December 30, leading to a meager 5.73% rise in import payments."
Kamal added that investments will now increase as the election is over.
According to central bank data, at the end of December 2018, current account deficit stood at $3.08 billion. Reserves stood at $31 billion as of January 16 this year, down from $32 billion a month earlier.
On January 27, the inter-bank exchange rate of the US dollar stood at Tk83.95, up from Tk78.88 two years earlier, increasing by a little more than Tk5.
