The country’s trade deficit decreased slightly to $4.05 billion in the first eight months of the current financial year, 2015-16, compared to that of $4.06 billion in the same period of FY15 due to a decrease in import payments against higher export earnings.
According to the latest Bangladesh Bank data, the trade deficit had risen by around 14.04 per cent in July-February of FY15 compared to that of $3.56 billion in the same period of FY14.
A BB official said the country posted a record trade gap in the last financial year but the deficit decreased slightly in the first eight months of FY16 due to a drop in import payments.
The deficit also decreased significantly in the first four months of FY16.
The trade deficit had hit its all-time high at $9.91 billion in FY15.
The trade gap, however, increased slightly between November and January of FY16, as the imports picked up during the period.
The BB data showed that the export earnings registered a 7.81 per cent growth in the first eight months of FY16 compared with that of a 2.44 per cent growth in the same period of FY15.
The export earnings stood at $21.57 billion in July-February of FY16 and it was $20.01 billion during the same period of FY15.
The imports registered a 6.44 per cent growth in the first eight months of FY16 compared to that of around 4.06 per cent growth in the corresponding period of FY15.
The import payments stood at $25.63 billion in July-February of FY16, which was $24.08 billion in the same period of FY15.
A BB official told New Age on Thursday that the country’s businesspeople were not interested much in opening letters of credit to expand their businesses due to the ongoing political uncertainty.
So, the trade gap decreased in the recent months, but it would not put much positive impact on the country’s macroeconomic situation, as the import of industrial raw materials did not increase much to match the size of the country’s industrial sector, he said.
Political uncertainty put an adverse impact on the country’s imports, which contributed to squeezing of the trade gap, the official said.
The investors and businesspeople are yet to regain their confidence to go for business expansion, and so the import financing by banks has remained dull in recent months, he said.
The businessmen are still following a cautious policy in setting up new industrial units and expanding existing industrial infrastructure, as they think political unrest may return anytime soon, the BB official said.
The BB data shows that the current account balance increased to $2.71 billion in the first eight months of FY16 against $2.19 billion during the same period one year ago.
The contracted trade deficit mainly played a role in registering a surplus current account balance in the first eight months of FY16.
The net foreign direct investment increased by 27.19 per cent to $1.45 billion in July-February from that of $1.14 billion in the same period of FY15.
The financial account of the country’s balance of payments increased to $905 million in the first eight months of FY16 from $528 million during the same period of FY15.
The financial account includes foreign direct investment, portfolio investment, and medium- and long-term loans.
The country’s overall balance increased by 41.65 per cent to $3.14 billion in July-February of FY16 against $2.22 billion during the same period of FY15 due to a strong position in the current account balance.
Source: New Age