The country’s trade deficit rose by 9.49 per cent or $1.02 billion in the July-February period of the current fiscal year 2020-21 mainly due to export earnings contraction.
Trade deficit rose to $11.8 billion in July-February of FY21 from $10.77 billion in the same period of FY20, the latest Bangladesh Bank data showed.
With the COVID-19 outbreak disrupting trade and economic activities, the country’s trade deficit was on the decline because of the slump in import payments against static export earnings.
Import payments gradually improved from November as exporters resumed importing industrial inputs in anticipation of COVID-19 vaccination launch.
However, uncertainty in import growth sustainability looms large following imposition of fresh restrictions by the government on public movement to contain the surge in coronavirus infections.
Asked about the current trade situation, former adviser to an interim government AB Mirza Azizul Islam told New Age, ‘The surge in trade deficit happened for a wrong reason — contraction in export earnings — and we had not expected such a situation.’
‘Unless we can get rid of the COVID-19 situation, improvements in export earnings cannot be expected,’ Mirza Aziz said.
Export earnings dropped by 1.28 per cent to $25.27 billion in the JulyFebruary period of FY21 against export of $25.6 billion in the same period of the previous fiscal year.
Of the exports, earnings against export of readymade garments fell by 3.73 per cent to $21.03 billion in the first eight months of FY21 against export of $21.85 billion in the same period of FY20.
On the other hand, the country’s import payments increased by 1.91 per cent to $37.07 billion during the period under consideration against $36.37 billion payments in the same period of FY20.
The former adviser mentioned that the upward import payment trend was a positive sign for the country.
Mirza Aziz, however, expressed his doubts about whether the trend would continue in the coming days following the imposition of a fresh lockdown.
Industrial production would face disruptions because the industries would not be able to perform in full swing, resulting in reduced production, he said, adding that the need for industrial input usually shrinks when the industries fail to fully utilise their capacities.
The BB data also showed that the country’s gross and net foreign direct investments dropped by 6.84 per cent and 31.21 per cent respectively in the period under consideration.
The data also showed that the country attained $606 million in net foreign direct investment in July-February of FY21 against $881 million in the same period of the previous fiscal year.
Foreign investors withdrew $204 million in portfolio investments from the stock market in July-February of FY21 against $37 million foreign investment in the same period in the previous fiscal year.
However, the country’s current account had a positive balance of $1.56 billion in July-February of FY21 against a $2.11-billion deficit in the first eight months of FY20.
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