The country’s trade deficit decreased by 58.28 per cent in the first half of the current financial year compared with that of 34.13 per cent fall in the same period of the FY13 due to a rise in exports against negative growth in imports. According to the latest BB data, the deficit narrowed to $1.53 billion in July-December of the FY14 from $3.67 billion in the corresponding period of the FY13.
A BB official told New Age on Thursday that the trade deficit had declined significantly in the first half of the FY14 due to the political unrest over the general elections.
The businesspeople have adopted a ‘wait and see’ approach to make fresh investment amid political uncertainty which ultimately hit the import and narrowed the trade gap in the first six months of the FY14, he said.
For this reason, the narrowed trade gap has failed to put positive impact on the country’s macro-economic situation as the required import products for industrial sector declined massively in the period.
The imports registered a 0.11 per cent negative growth in the first six months of the FY14 compared with that of a negative growth of 6.69 per cent in the corresponding period of the FY13.
The import payment stood at $16.04 billion in July-December of the FY14 while it was $16.06 billion in the same period of the FY13.
Besides, the businesspeople failed to make shipment of their imported products from abroad due to frequent strikes and blockade called by the opposition parties in the last three months of 2013, the BB official said.
The country’s export earnings increased by 17.15 per cent in the first six months of the FY14 compared with that of 6.47 per cent growth in the same period of the FY13.
The export earnings stood at $14.51 billion in the first half of the FY14 and it was $12.38 billion during the same period of the FY13.
The export earning would have increased more in the period if the country was able to avoid the political crisis, the central banker said.
The BB data, however, showed that the service sector trade deficit increased by 14.45 per cent to $1.90 billion in July-December of the FY14 from $1.66 billion in the corresponding period of the FY13.
In the first half of the FY14, the country received $1.56 billion from the service sector but it paid foreign sources $3.47 billion during the same period of the FY13.
Transportation, travel, communication services, insurance and financial services, information and communications technology services, entertainment, culture and their related services are considered as service sector.
The current account balance increased by 124.74 per cent in the first half of the FY14 from that in the same period of the FY13 due mainly to the robust export growth against the lower import cost.
The current account balance increased to $2.65 billion in July-December of the FY14 from $1.18 billion in the same period of the FY13.
The workers’ inward remittance usually plays an important role in increasing the current account balance of Bangladesh, but the inflow posted a negative growth of 8.30 per cent in the first half of the FY14.
The workers’ inward remittance stood at $6.72 billion in July-December of FY14 against $7.33 billion in the same period of the FY13.
The negative import growth mainly contributed to the robust current account balance of the country in the first half of the FY14.
Net foreign direct investment increased by 5.40 per cent to $840 million in the first six months of the FY14 from that of $797 million in the same period of the FY13.
The BB data, however, showed that the financial account of the country’s balance of payments declined by 76.48 per cent to $428 million in the first half of the FY14 from $1.82 billion during the same period of the FY13.
The financial account includes foreign direct investment, portfolio investment, and medium- and long-term loans.
Against the backdrop, the country’s overall balance decreased by 3.78 per cent to $2.61 billion in the first six months of the FY14 against $2.72 billion during the same period of the FY13.
-With New Age input
