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The country’s trade deficit increased by 7.28 per cent or $1.09 billion year-on-year in the July-May period of this fiscal year of 2019-20 due mainly to a plunge in export earnings during the countrywide shutdown amid the coronavirus pandemic after a persistent slowdown in the previous months of the fiscal year.
Before the imposition of shutdown, the country’s trade deficit in the first nine months of the current fiscal year inched down by $123 million, or 1.01 per cent, to $12.07 billion year-on-year.
The situation, however, changed in April and May due mainly to the outbreak of coronavirus in the country and subsequent imposition of the shutdown from March 29 to May 30 by the government to contain the spread of coronavirus.
In July-May of FY20, the country’s trade deficit increased to $16.07 billion against $14.98 billion in the same period of FY19.
Although both export and import were impacted severely due to the coronavirus outbreak, the fall in import was lower than that of export that resulted in an increase in trade deficit, South Asian Network on Economic Modeling executive director Selim Raihan told New Age.
The fall both in export and import came due mainly to the outbreak of coronavirus, he said.
The country’s export sectors including the readymade garments had been facing order cancellations even before the coronavirus outbreak began in the country, Selim said.
The export stagnation, import slide and subsequent piling up of reserve to $35 billion suggest that the economic recovery projections made in the budget would not be easy, he said.
The country’s export earnings nosedived by 82.85 per cent and 61.57 per cent in April and May this year respectively.
With the plunge in April and May, the country’s export dropped by 18.16 per cent to $30.18 billion in July-May of FY20 against $36.87 billion in the same period of FY19.
Import also dropped by 10.81 per cent to $46.24 billion in July-May of FY20 from $51.85 billion in the same period of FY19.
The country’s trade deficit may rise further in the coming months when the export-oriented industries will resume operation after the pandemic is over while the turnaround in export earnings would largely depend on the gaining of economic momentum in countries from where the county’s major earnings come, experts said.
Even though many of the country’s export destinations have already entered the reopening phase after tackling coronavirus, the situation is only getting worse in Bangladesh, they said.
Unless the coronavirus crisis is tackled efficiently and the situation becomes normal, the buyers would not be interested to source products from here, they said.
The current account deficit, however, dropped to $4.37 billion in the July-May period of the current fiscal year from $5.15 billion in the same period of FY19.
The inflow of remittance dropped by 14 per cent to $1.50 billion year-on-year in May, registering a fall of $244 million from the same month a year ago. It was $1.74 billion in May last year.
The country’s overall balance stood at a surplus of $1.63 billion in the July-May period of FY20, against a deficit of $682 million in the same period of the previous fiscal year.
The overall surplus balance would not sustain if the trade deficit and current account deficit widen, experts said.
In July-May of FY20, the net foreign direct investment dropped by 19.04 per cent to $1.97 billion from $2.43 billion in the same period of FY19.
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