Trade deficit may widen this fiscal

The country’s trade deficit may go up in the current fiscal year due to higher imports and lower exports, central bank officials forecast.
Bangladesh Bank has projected that external trade deficit might balloon to $5.530 billion this fiscal as an impact of declines in export prices caused by the global recession.
‘We have forecast an increase in the country’s trade deficit due to probable fallouts of the recession in coming months,’ a senior official of the Bangladesh Bank told New Age.
The official said the country’s import cost would gradually increase as there are indications that global food and fuel prices would go up.
The country’s trade deficit with the rest of the world stood at $ 4.462 billion during the July-April period of the 2008-09 fiscal as against $4.475 billion of the year-ago period, according to Bangladesh Bank statistics.
The country earned $12.863 billion foreign exchange from exports inclusive of earning by export processing zones in the first 10 months of 2008-09 fiscal. The amount is far below the government’s target of $13.10 billion for the period.
But, the import bills went to as high as $17.325 billion during the same period. Price of oil in the international market fluctuated between $60 and $70 a barrel, up from the previous year’s low of $30.
However, remittance grew 22.23 per cent during 2008-09 fiscal year to above $9 billion, which cushioned the pressure on the country’s balance of payments over the years.
Overall, the country has a surplus balance in foreign exchange amounting to $2.236 billion during the July-April period, said the central bank.
Dhaka suffers huge trade deficits amounting to almost $5.5 billion against two of its biggest trading partners — Beijing and New Delhi. Bangladesh annually imports goods worth around $3 billion from China and over $3 billion from India compared to its yearly exports valued about $250 million and $360 million to the two countries respectively, according to the latest official statistics.
Despite deficit in the trade balance, the current account balance recorded a huge surplus at $400 million during the July-April period of the fiscal as compared to $278 million surplus during the same period of the 2007-08 fiscal due mainly to large current transfers of $8.28 billion, according to a recent report by the central bank
Akbar Ail Khan, former adviser to the caretaker government, said the country’s balance of payment might not be negatively affected even if exports decline and imports rise in coming months as the robust growth of remittance would support the balance of payments.
He, however, said the balance of payments might be affected if inward remittances flow falls drastically.

Courtesy of NewAgebd