Country’s merchandise trade deficit has widened to $14.22 billion in the first ten months of the current fiscal year as export earnings fell more than import spending, indicating a sluggish trend in the economy owing to the global coronavirus pandemic.
The deficit rose by $243 million or 1.74% year-on-year to $14.22 billion during the period (July-April) from $13.97 billion in the same period of the last fiscal year, according to the Bangladesh Bank (BB) latest data.
Export growth contracted by 13.20% to $28.75 billion in July-April from $33.12 billion in the same period of the previous fiscal year.
Import growth also dropped by 8.77% to $42.97 billion from $47.10 billion, as per the latest BB data.
The indication is not good for the economy as the volume of export and imports have been decreasing alarmingly in the last few months, say experts.
However, current account deficit decreased 22.49% year-on-year to $4.12 billion in the first ten months of the current fiscal year, as per central bank data.
The trade deficit will increase alarmingly in the coming months owing to downward trend in both export and remittance, says Zahid Hussain, former lead economist of the World Bank, Bangladesh.
The decreasing trend of current account deficit will not sustain in the near future, he also adds.
Export earnings saw a shocking fall of 83% in April, as the merchandise export fetched only $520 million in the month against $3.03 billion in the same month of last year.
The outbreak of new coronavirus jolted both local manufacturing industry and supply chain in export destinations, as lockdown and shutdown in global economies took the toll on the country’s external front, stakeholders said.
The inflow of remittance declined by 14.01% year on year to $1.50 billion in May as the coronavirus pandemic took the toll, as per central bank data.
The inflow of remittance might decline in the coming days because a huge number of migrants would become jobless, Zahid Hussain warned.
He said that there would be more pressure in foreign exchange reserves in the near future; however, the reserve is good enough to settle import payments for seven months.
On June 03, the country’s foreign exchange reserve hit a new height, setting a record of over $34 billion amid the coronavirus pandemic.
The aid of developing partners and remittance added to raise the foreign exchange reserve to $34.23 billion on June 3, said a high official of the Bangladesh Bank.
The country's overall balance stood at a surplus of $623 million in the first ten months of the current fiscal, against a deficit of $590 million of the previous fiscal.
The surplus overall balance will not sustain if the trade deficit and current account deficit widen further, experts warn.