Trade deficit falls by 3.50% in Q1 of FY20

Mehedi Hasan
Published : 06:00, Nov 11, 2019 | Updated : 06:00, Nov 11, 2019

Bangladesh's trade deficit fell by 3.50% year-on year in the first quarter of the ongoing fiscal, which experts attribute to negative growth both in import and export.
According to figures by the Bangladesh Bank, trade deficit dropped to $3.71 billion in July-September period of FY20 against $3.85 billion in the previous fiscal's first quarter.
“The drop in trade deficit was due to declining trend in export and import during the period that indicates a weak economy,” says Policy Research Institute of Bangladesh Executive Director Ahsan H Mansur.
He said the situation was not good for the economy. Such slowdown in the economy would ultimately lead to a sluggish investment and less job creation, Ahsan, also the BRAC Bank Chairman, added.
In July-September period of this year, imports fell by 2.55% to $13.25 billion against $13.59 billion in the same period last year.
On the other hand, exports fell by 2.18% to $9.53 billion during the period from $9.74 billion in the same period of FY19. The apparel export fell by 1.64% to $8.05 billion, according to the BB data.
Former lead economist of World Bank's Dhaka office Zahid Hussain said the deficit narrowed due to the negative import growth, as all types of import including industrial capital machinery declined during the first quarter of the current fiscal year, he added.
“The overall import, particularly those of capital machineries and raw materials are the fundamental basis for local industrialization, which subsequently transforms into enhanced export earnings for the economy,” said Hussain.
He said that export earnings also declined, suggesting that the overall business was facing headwinds.
The current account balance and overall balance turned negative compared to a month ago. As a result, there would be more pressure on foreign exchange reserve in the coming days, he pointed out.
According to the official figures, the current account balance turned negative by $678 million in September from positive of $260 million in August.
Bangladesh received $1.10 billion in foreign direct investment in September of the current fiscal year against $1.03 billion in the same month last fiscal year, according to the central bank.
As of October this year, foreign exchange reserves stood at $32.43 billion, up from $32.07 billion a year earlier.