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Trade deficit soars to $17.86b in FY20 as pandemic batters exports

Staff Correspondent | Published: 22:38, Jul 28,2020

 
 

The country’s trade deficit widened by 12.79 per cent year-on-year in the last fiscal year 2019-2020 due mainly to a plunge in export earnings during the countrywide shutdown amid the coronavirus pandemic.

At the end of FY20, the country’s merchandise trade deficit with the rest of the world increased to $17.86 billion against $15.84 billion in the previous fiscal year.

Before the imposition of shutdown, the country’s trade deficit in the first nine months of the last 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, May and June 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.

Although both export and imports 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, economists said.

The fall both in export and import came due mainly to the coronavirus outbreak, they said.

In the last three months of FY20, the country’s export earnings witnessed a significant fall as many countries are still struggling to tackle the pandemic.

As a result, the country’s exports dropped by 17.1 per cent to $32.83 billion in FY20 against $39.6 billion in FY19.

Imports dropped by 8.56 per cent to $50.69 billion in the immediate past fiscal year from $55.44 billion in the previous fiscal year.

The country’s trade deficit may rise further in the coming months when the export-oriented industries will start full-fledged operations 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 country’s major export earnings come, experts said.

Even though many of the export destinations have already entered the reopening phase after tackling coronavirus, the situation is yet to come under control 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.

In FY20, the current account deficit, however, dropped to $4.85 billion from $5.12 billion in FY19.

The country’s overall balance stood at a surplus of $3.66 billion in FY20, against the $179 million surplus in the previous fiscal year.

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