The country’s trade deficit narrowed by 26.26 per cent in the first eight months of this financial year on year-on-year basis but businesses and experts expressed their concern that the reduction would not bring much benefit as it was achieved with a massive fall in imports.
According to the BB data released on Tuesday, the trade deficit stood at $4.70 billion at the end of the eight month of the FY 2012-13, down from $6.38 billion recorded in the corresponding period of the FY 2011-12.
The figure of the trade deficit was $4.85 billion in July-February of the FY 2010-11.
The BB data showed that import in July-February of this financial year registered a negative growth of 1.45 per cent to $21.78 billion from $22.10 billion during the same period of FY 2011-12.
On the other hand, the country’s exports increased by 8.63 per cent to $17.07 billion in July-February of this financial year from $15.72 billion in the first eight months of the FY 2011-12.
‘The reason for the reduced trade deficit was the drop in import payment,’ former BB governor Salehuddin Ahmed told New Age on Wednesday.
‘Usually a narrowing trade deficit puts a positive impact on the macroeconomic situation of a country. But, the contraction of our country’s trade deficit will not create optimism in the manufacturing sector as the import of industrial raw materials and capital machinery dropped significantly,’ he said.
An unfavourable investment situation is the cause of the decline in imports, he said.
The import of industrial raw materials and the capital machinery which are required for expanding the industrial sector and its growth declined massively in the first eight months of the FY 2012-13.
The BB data showed the settlement of letters of credit for industrial raw materials registered a negative growth of 6.84 per cent and for capital machinery posted a negative growth of 18.46 per cent in July-February of the FY 2012-13.
Growth in the settlement of LCs for industrial raw materials was 12.61 per cent and that for capital machinery was 19.82 per cent in July-February of the FY 2011-12.
Besides, food grains (rice and wheat) and petroleum imports also registered negative growth of 36.83 per cent and of 5.45 per cent respectively in the first eight months of the FY 2012-13 from that in the same period a financial year ago, the BB data showed.
The dull import situation will worsen if the ongoing political unrest continues in the months to come, a BB official said.
Dhaka Chamber of Commerce and Industry president Md Sabur Khan said that the country’s business sector would not get much support from the declining trend in the trade deficit on a falling import.
He feared that the industrial productive sector might plunge in a crisis if the negative import growth in industrial raw materials and capital machinery continued in the coming months.
The BB data, however, showed that the service sector deficit in the first eight months of the FY 2012-13 increased by 37.72 per cent to $2.82 billion.
In July to February of the FY 2012-13, the country received $1.12 billion from the service sector but it paid foreign sources $3.95 billion.
The narrowed trade deficit and an increased trend in inward remittance have strengthened the country’s current account balance in the first eight month of the FY 2012-13, said another BB official.
The current account balance in July-February stood at $1,355 million against a negative figure of $660 million in the same period of the FY 2011-12, according to the BB data.
Net foreign direct investment increased by 10.08 per cent to $950 million in the July-February period of the ongoing fiscal year from $863 million in the same period of the FY 2011-12, the BB data showed.
In the period, medium- and long-term loans also increased by 49.21 per cent to $1,234 million on year-on-year basis.
-With New Age input
