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Country’s trade deficit dropped by 15.6 per cent or $181 million in July, the first month of the current fiscal year, compared with that in the same month of last fiscal year due mainly to a dismal state of imports.
As per the Bangladesh Bank data released on Monday, the country’s trade deficit decreased to $979 million in July of FY 2019-20 against $1.16 billion in the same month of FY 2018-19.
The fall in trade deficit in July this fiscal was the continuation of the trend observed in last fiscal.
In FY19, trade deficit fell by 14.76 per cent to $15.49 billion from the record $18.18 billion deficit in FY18.
The fall in trade deficit can be considered as a positive sign for the economy but there is no scope for becoming complacent due to the sorry state of imports, especially those of the productivity generating items, capital machinery and industrial raw materials, experts and bankers said.
Imports witnessed lenient 2.26 per cent growth in July against 8.11 per cent growth in export earnings, bringing down the trade deficit significantly.
In July this year, import payments were $4.81 billion against $4.70 billion in the same month last year.
On the other hand, export earnings reached $3.83 billion in the first month of FY20 against $3.54 billion in the same month of last fiscal year.
Of the export earnings, export of readymade garments that constitute 86.5 per cent of the country’s exports increased to 9.68 per cent to $3.31 billion from $3.02 billion.
The tepid import growth is an indication of stagnancy in investment and the country’s economy would not be able to reach the next phase of economic development without adequate contribution from the industrial sector, experts and bankers said.
Considering the import dependency of the country’s economy, the sustainability of the country’s export growth might also face challenge in future unless adequate investment is ensured, they said.
Due to the fall in import payments against notable growth in exports, current account balance turned positive $240 million in July against negative $179 million in the same month of FY19.
Besides the current account balance, the country’s overall balance also turned positive $124 million in July of FY20 against negative $199 million in the same month last year.
The BB data also showed that the country attained $214 million net foreign direct investment in July this year against $200 million in the same month last year.
However, the net portfolio investment, meant for the investment in the country’s capital market, dropped to $7 million from $17 million.
The BB statement also showed that the country’s gross reserve stood at $32.55 billion in July this year from $32.09 billion in July last year.
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