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Trade deficit widens by 5.41% in July-Dec

  • Published at 10:14 pm February 4th, 2020
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File photo of Chittagong Port Md Manik/Dhaka Tribune

Import growth also dropped by 2.72% to $27.06 billion from $27.82 billion

Trade deficit widened in the first half of the current fiscal year to December as export earnings fell more than import spending, indicating a sluggish trend in the economy. 

The overall trade gap widened by $422 million or 5.41% year-on year to $8.22 billion during the period from $7.80 billion in the same period of last fiscal year, according to the Bangladesh Bank latest data. 

The country’s export growth fell by5.89% to $18.84 billion in July-December from $20.02 billion in the same period of the previous fiscal. 

Import growth also dropped by 2.72% to $27.06 billion from $27.82 billion. 

Current account deficit, however, decreased 60.24% year-on-year to $1.34 billion in the first six months of 2019-20 fiscal year, according to the data. 

“The increasing trend of remittance has helped reduce the deficit in the current account balance. The trend would not sustain in the future,” said Zahid Hussain, former lead economist of the World Bank, Bangladesh. 

The country’s remittance inflow increased by 21.45% to $11.04 billion in the July-January period of the current fiscal year compared to the same period of last fiscal year, according to the data.

Trade deficit widened due to the declining trend in export more than the import that indicated a sagging economy, he added. 

Zahid Hussain suggested that the government focused more on export diversification and devalued the Taka against the US dollar for export growth. 

"It is a very bad signal for our economy as all types of import including industrial capital machinery are declining," he added. 

“The overall import, particularly those of capital machineries and raw materials which are the fundamental basis for local industrialization, which subsequently transforms into enhanced export earnings for the economy,” said Zahid Hussain.