The country’s trade deficit eased by 2.33 per cent or $230 million in the first seven months of the current fiscal year 2019-2020 as import, specifically from China, contracted further in January due to the coronavirus outbreak.
Experts said that the drop in trade deficit would not be positive for the economy rather it would weaken the country’s industrial output and subsequent fall in export earnings.
In July-January of FY20, the country’s trade deficit dropped to $9.64 billion from $9.87 billion in the same period of the previous fiscal year.
In July-December of FY20, the deficit in trade widened by 5.41 per cent or $422 million from that in the same period of last fiscal year.
Due to the outbreak of coronavirus, many countries’ importers postponed imports from China in late January.
On December 31, 2019, China first alerted the World Health Organisation to an outbreak of coronavirus in its Wuhan city.
Later on January 20, Chinese president Xi Jinping publicly addressed the issue of the virus.
Due to escalating number of infected individuals, the Chinese authority cordoned the Wuhan city on January 23, more than two weeks after the first death announcement.
In FY2019, the country’s total import from China was worth $13.64 billion or Tk 1,14,593.5 crore.
The Bangladesh Bank data showed that the country’s import dropped by 4.43 per cent to $32 billion in the first seven months of FY20 while the import in the first six months had dropped by 2.72 per cent.
Only in January of FY20, the country’s import dropped by 12.87 per cent, or $0.73 billion, to $4.94 billion from $5.67 billion in January of FY19.
On the other hand, the country’s export earnings dropped by 5.31 per cent to $22.36 billion in the first seven months while the fall was 5.89 per cent in the first six months.
‘It is the impact of coronavirus that pulled down the country’s import in January as China was a major sourcing country for Bangladesh,’ Policy Research Institute executive director and BRAC Bank chairman Ahsan H Mansur told New Age.
‘As a result, the country’s trade deficit eases. But, we do not want ease in trade deficit in such a way rather we want to ease trade deficit by enlarging export volume,’ he said.
Import of different products from China in terms of quantity and value declined by 21 per cent and 8.30 per cent respectively in the period between January 1 to February 15 of FY20 compared with that in the same period of FY19.
Ahsan also cautioned that the country’s import would fall further until the outbreak was contained in China.
Besides the lower import from China, a fall in local demand was another reason for the fall in import that usually does not contract, he said.
‘When the data would be available, we will see that export fell due to the lower import of industrial raw materials,’ he said.
It would take another couple of months to realise the impact of export order fall due to the epidemic of coronavirus, he said.
He also forecasted that the country might suffer in the next several months due to the coronavirus.
The country’s overall balance, however, turned $132 million positive in July-January from $975 million deficit in the same period of FY19.
In the period, the situation of current account balance also improved as the deficit dropped to $1.52 billion from $4.04 billion in the same period of last fiscal year due to a rise in remittance inflows.
The BB data showed that inflow of remittance increased by 20.06 per cent or $2.09 billion to $12.5 billion in July-February of FY20 compared with that of $10.41 billion in the same period of last financial year.
Besides, the net inflow of foreign direct investments in Bangladesh increased by 3.96 per cent to $1.68 billion in July-January of FY20 from $1.62 billion in the same period of FY19.
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