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The country’s trade deficit rose by 21.12 per cent or $3.1 billion year-on-year in the July-April period of the current fiscal year 2020-21 amid a higher import payment growth against export earnings.
The latest Bangladesh Bank data showed that the country’s trade deficit rose to $17.23 billion in July-April of FY21 from $14.22 billion in the same period of FY20.
Businesses’ move to rebuild their industrial input stock was the main reason for the surge in import payments in the last few months amid major vaccination drives in the developed countries especially in the major export destinations of Bangladesh, businesses said.
Even though the vaccinated population in Bangladesh is still below 4 per cent, the major export destinations for Bangladesh, including the United States, the United Kingdom and Germany have vaccinated a significant portion of their citizens thus laying the foundation for the countries to reopen their economic activities in full swing, they said.
A complete resumption of economic activities in the countries would pave the way for the country’s businesses for taking their exports to the pre-pandemic level shortly, the businesses said.
Import payments increased by 12.99 per cent to $48.56 billion in July-April of FY21 against $42.77 billion in the same period of FY20.
The country’s import payments increased to $5.79 billion in April from $5.7 billion in March. The payments were $6.69 billion and $5.15 billion in January and February respectively against the monthly average import payments of $4.2 billion in July-December of FY21.
Former interim government adviser AB Mirza Azizul Islam recently told New Age, ‘Import is vital to keeping the production situation intact as well as to improve the export situation of the country.’
He said, ‘Unless the country’s export earnings improve, the trade deficit would widen.’
Given the trade deficit, dependency on foreign exchange reserve might increase and lead to deterioration in the foreign exchange reserve, said Mirza Azizul.
The BB data showed that the export earnings rose by 8.97 per cent to $31.33 billion in July-April of FY21 against $28.75 billion in the same period of FY20.
The BB data also showed that the country’s gross foreign direct investments increased by 7.85 per cent to $2.95 billion in July-April of FY21 from $2.74 billion in the same period of FY20.
However, the country’s net FDI increased sharply by 32.13 per cent to $1.47 billion in the first 10 months of the current fiscal year from $1.11 billion in the same period of the previous fiscal year.
Foreign investors withdrew $220 million in portfolio investments from the stock market in July-April of FY21 against $31 million in investments in the same period of the previous fiscal year.
However, the country’s current account deficit stood at $47 million in July-April of FY21 against a $3.77-billion deficit in the first 10 months of FY20.
