Declining export, import performance key reasons
Country’s merchandise trade deficit with its trading partners declined to $12.07 billion in the first nine months of the current fiscal year, thanks to the decreasing trend of import and export activities owing to the global coronavirus pandemic.
The deficit dropped by $130 million or 1.07 % year-on-year to $12.07 billion during the period (July-March) from $12.20 billion in the same period of the last fiscal year, according to the Bangladesh Bank (BB) latest data.
Export growth contracted by 6.34% to $28.25 billion in July-March from $30.16 billion in the same period of the previous fiscal year.
Import growth also dropped by 4.81% to $40.33 billion from $42.36 billion, as per the latest BB data.
Although the trade deficit narrowed slightly, 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.
Current account deficit, however, decreased 37.13% year-on-year to $2.64 billion in the first nine months of the current fiscal year, as per data.
The decreasing trend of current account deficit will not sustain in the near future, the trade deficit and current account deficit will increase alarmingly owing to slowdown trend of export and remittance, says Zahid Hussain, former lead economist of the World Bank, Bangladesh.
The inflow of remittance declined by 14.01% year on year to $1.50 billion in May as 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, he warned.
Zahid Hussain said that there would be more pressure in foreign exchange reserve in near future; however, the reserve is good enough to settle import payments for five months.
As of March 31, foreign exchange reserve stood at $32.38 billion, as per BB data.
The country's overall balance stood at a surplus of $345 million in the first nine months of the current fiscal, against a deficit of $326 million of previous fiscal. The surplus overall balance will not sustain if the trade deficit and current account deficit widen, experts warn.