Trade deficit balloons by 133pc in Q1

July-Sept current account deficit surpasses annual figure of FY17

Staff Correspondent | Published: 00:05, Nov 06,2017

 
 

The country’s trade deficit widened by 133 per cent or $2.08 billion during first quarter of the current fiscal year 2017-18 compared with that in the same period of FY17 mainly due to growing spending to meet-up payments for rice import and other consumer goods.
During July-September of the FY18, the country’s current account balance also registered a deficit of $1.79 billion, surpassing the $1.48 billion deficit registered in whole-financial year of FY17.
Annual current account balance, the gap between total overseas income (export receipts and net earnings like remittances) and outflow of fund (import payments and profit repatriation by multinational companies and local people), registered a deficit of $1.48 billion in FY17 for the first time in last five years.
According to the latest Bangladesh Bank data released on Sunday, trade deficit — the gap between import payments and export earnings — increased to $3.65 billion in July-September of FY18 against that of $1.56 billion in the corresponding period of FY17.
During Q1, import payments grew by 28.38 per cent while export earnings increased by only 7.7 per cent, the central bank data showed.
The gap between export earnings and import payments has been on the rise this fiscal year due to sharp increase in import of rice and other consumer goods due to the loss of rice in flood, officials of the central bank said.
As the prices of rice has increased sharply in the local market due to shortage of the staple food in government stock after the flash floods in the country’s north-eastern haor areas, the imports of the item has been on the rise to contain prices and to meet-up future demand, they said.
Total import payments, which also include items like industrial raw materials and capital machinery, increased to $12.19 billion in Q1 of FY18 against that of $9.50 billion in the same period of FY17.
On the other hand, export earnings increased to $8.54 billion during the period against $ 7.93 billion in the same period of last year.
The trade deficit hit an all-time high in the last FY17 standing at $9.47 billion, up 46.62 per cent compared with that of the FY 2015-16.
BB officials said huge trade deficit is not a good sign for the country as it may put an adverse impact on the macroeconomic situation.
The government should restrain import of unnecessary and luxury goods and take initiative to increase export earnings through diversification of export items to reduce the trade deficit, they said.
During Q1 of the FY18, the country’s current account balance also registered a deficit of $1.79 billion against a surplus amount of $539 million in the same period of FY17 due to a lower growth in inward remittance, trade balance, services and primary income.
Annual current account balance, the gap between total overseas income (export receipts and net earnings like remittances) and outflow of fund (import payments and profit repatriation by multinational companies and local people), registered a deficit of $1.48 billion in FY17 for the first time in last five years.
The BB data also showed that the country’s net foreign direct investment increased by 11.62 per cent to $490 million during July-September this year against $439 million in the same period last year.
Balance of payment of the country’s financial account, foreign direct investment, portfolio investment, and medium- and long - term loans, posted a surplus of $1.57 billion in Q1 of FY18 from a surplus amount of $868 million during the same period of FY17.
Overall balance, however, posted a deficit of $360 million during the period compared with that of a surplus amount of $1.79 billion during the same period a year ago. 

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