Bangladesh’s trade deficit has fallen by 14.57% year-on-year to $14.66 billion in the first eleven months of the immediate past fiscal year, which analysts attributed to a slowdown in import and a significant hike in exports.
“This indication is good for the economy,” says Ahsan H Mansur, executive director of the private think-tank Policy Research Institute.
He said the trade deficit narrowed due to the slow imports growth. Last year, a significant amount of money has gone through capital flight. As a result, the import growth was so high in the last year, he adds.
On the other hand, banks are unable to open enough LCs (Letter of Credits) owing to the dollar crisis, this is a reason to slow imports growth, he maintains.
According to the data from central bank, trade deficit eased in July-May as import grew by only 2.62% against the export earnings growth of 11.45%, during the period.
Import payments stood at $51.85 billion in July-May of financial year (FY) 19 from $50.52 billion in the same period of FY18.
According to the data, export earnings stood at $37.19 billion in the first 11 months of the just concluded fiscal year against $33.37 billion in the same period of FY18.
Deficit in the overall balance of payment, however, stood at $682 million in July-May of FY19 against $970 million in the same period of FY18.
The situation of current account balance also improved slightly as the deficit dropped to $5.17 billion from $8.60 billion in the same period, the last fiscal year.
The export earnings during July-May of the immediate past fiscal year registered 11.45% growth to $37.19 billion. The apparel sector, the largest contributor to the national exports, earned $31.73 billion, up by 12.82%, which was $28.12 billion in the same period of FY18.
“It is a positive that the export earnings from the apparel sector are registering double digit growth. And it will continue as Bangladesh offers quality products at lower prices compared to other countries,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Vice President Md Moshiul Azam Shajal.
As of Jul 2, foreign exchange reserves stood at $32.40 billion due to the rising trend of export earnings, and remittances.