Bangladesh’s trade deficit rose by 5.53% to $3.85 billion in the first quarter of the current fiscal year, driven by a rise in imports.
The deficit in the same period of the previous fiscal year was $3.65 billion, according to data from Bangladesh Bank.
Abdus Salam Murshedy, a former president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told the Dhaka Tribune that the rise in imports was fuelled by private sector investment.
“The Bangladesh economy is doing better in recent years,” Salam, who is also the managing director of Envoy Textile Limited, said.
“In going for new investment, the entrepreneurs have imported huge capital machineries, which pushed the import cost up and widened the trade deficit.”
A senior Bangladesh Bank official confirmed that the trade deficit increased due to a rise in import costs compared to export earnings.
However, data for July to October showed that Bangladesh’s exports earnings from the apparel sector rose by over 20%.
“This means Bangladesh has increased the capacity through investment,” Salam said. “In the last fiscal year, the country registered a 7.8% GDP growth, so it indicates that a rapid growth in industrialization has increased the import payments.”
The former caretaker advisor, AB Mirza Azizul Islam, told the Dhaka Tribune that while the apparel sector was performing well, the government should aim to enlarge the export earnings base.
“Bangladesh has to take steps to enhance export earnings to reduce the trade gap,” he said.
“To this end, focus should be given on markets and products diversification. In addition, the central bank and government have to strengthen monitoring so that no one can launder money in the name of imports.”
As per the EPB data, export earnings from the readymade garments sector rose by 20.08% to $11.33 billion during the first quarter of the current FY19, up from $9.43 billion in the same period a year ago.
In the July to October period of FY19, Bangladesh earned $13.65 billion, a rise of 18.65% on the $11.50 billion earned in the same period last year.
