The country’s trade deficit in the July-October period of the current financial year 2019-20 narrowed by 43.52 per cent or $2.49 billion year-on-year but indications of an economic slowdown continued to exist with the growth of import, a major component of economic vibrancy, remaining dismal since the coronavirus outbreak.
According to the Bangladesh Bank data released on Thursday, trade deficit dropped to $3.24 billion in the July-October period of FY21 against $5.73 billion in the same period of FY20.
In July-October this year, imports fell by 12.99 per cent to $15.78 billion from $18.14 billion in the same period last year.
Negative growth in import payments was the major reason behind the narrowing of trade deficit in the July-October period, economists and BB officials said.
Experts said that export earnings continued to drop as the recent world economic woes induced by the coronavirus outbreak affected global consumption of readymade garment products along with other commodities.
Signs of a quick turnaround of the global economy have been fading with the second wave of the coronavirus breaking out in western countries, they said.
They said that the negative growth in import meant that investment was not taking place and machinery and raw materials were imported at a slower pace due to production of lower volume of export products.
Even though some may interpret the shrinking of the trade deficit as a good indication, a deeper analysis of the country’s import-dependent nature would reveal that it was not giving a satisfactory message to the economy at all, former caretaker government adviser AB Mirza Azizul Islam told New Age recently.
A slight improvement in export earnings coupled with funds released from donor agencies, including the World Bank, the Asian Development Bank and the International Monetary Fund, also contributed to the improved state of balance of payments, the economist said.
Export earnings in the first quarter of FY21 increased marginally by 1.1 per cent to $12.55 billion from $12.41 billion in the same period of FY20.
Policy Research Institute executive director Ahsan H Mansur recently told New Age, ‘The impact of coronavirus would not be over before mid or late next year.’
In July-October this year, earnings from RMG export fell to $10.45 billion from $10.58 billion in the same period of FY20.
The current account balance turned $4.05 billion positive in July-October of FY21 from $1.51 billion deficit in the same period of FY20.
In the first four months of FY21, the country’s overall balance turned $4.14 billion positive against $229 million deficit in the same period of the last fiscal year.
The country’s gross and net foreign direct investments dropped by 30.77 per cent and 50.16 per cent during the period under consideration.
The BB data also showed that the country attained $153 million in net foreign direct investment in July-October in this fiscal year against $307 million in the same period in the last fiscal year.
Net portfolio investment, meant for investment on the country’s capital market, posted $167 million in deficit in July-October from $32 million in the positive in the same period in the last fiscal year.
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