Trade deficit soars to $ 5.72b in 7 months

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The country’s trade deficit increased by 105.12 per cent to US$ 5.72 billion in the first seven months of the current financial year 2014-15 compared with that of US$ 2.79 billion during the same period of the FY14 due to a massive drop in export earnings against a higher import payment.
Officials of Bangladesh Bank said falling export growth of readymade garment, the main export product of the country, dented the overall earnings in July-January of the FY15 while import of capital machinery continued to rise significantly during the period.
The trade deficit had posted a negative growth of 35.01 per cent in July-January of the FY14, according to the BB data.
The trade deficit was US$ 4.28 billion in the first seven months of FY13.
The export earnings registered a 2.07-per cent growth in the first seven months of the FY15 compared with that of 15.18 per cent growth in the same period of FY14.
The export earnings stood at US$ 17.58 billion in July-January of the FY15 while it was US$ 17.22 billion during the same period of the FY14.
The imports registered a 16.43 per cent growth in the first seven months of the FY15 compared with that of 3.99 per cent growth in the corresponding period of the FY14.
The import payment stood at US$ 23.30 billion in July-January of the FY15 and it was US$ 20.00 billion in the same period of the FY14.
Former interim government’s finance adviser AB Mirza Azizul Islam earlier told New Age that the decreased growth in export earnings had put an adverse impact on the country’s trade account.
The lower export growth in the recent period has already created a worrisome situation for the country’s business sector, he said.
The higher import growth in the period was apparently good for the industrial sector, but the trend also raised suspicion due to a lower private sector credit growth in recent months, Mirza Aziz said.
He said, ‘The import growth of capital machinery was much higher than that of industrial raw materials, but the businesspeople took little initiative to expand their business in the period due to political uncertainty.’
He said the importers might now be making over-invoicing to launder money abroad as the recent higher import growth had not put any major positive impact on the industrial sector.
The BB data showed that the current account balance registered a deficit amount of US$ 1.33 billion in the first seven months of the FY15 against a surplus amount of US$ 2.54 billion during the same period a year ago.
The net foreign direct investment increased by 5.07 per cent to US$ 850 million in the first seven months of the FY15 from that of US$ 809 million in the same period of the FY14.
The BB data, however, showed that the financial account of the country’s balance of payments posted a surplus of US$ 3.31 billion in the first seven months of the FY14 from a surplus of US$ 24 million during the same period of the FY14.
The financial account includes foreign direct investment, portfolio investment, and medium- and long-term loans.
The country’s overall balance decreased by 38.18 per cent to US$ 1.70 billion in the first seven months of the FY15 against US$ 2.76 billion during the same period of the FY14 due to its weak position in the current account balance.
Source: New Age

 

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