Imports increased significantly in fiscal 2013-14 indicating that the economy is gaining back its confidence lost to the 2012-13 political unrest.
Actual imports as indicated by settled letters of credit (LC) jumped more than 15 percent year-on-year to $37.19 billion against opened LCs of $41.82 billion that rose by 16 percent in fiscal 2013-14, according to Bangladesh Bank. The growth in settlement of LCs was negative by more than 7 percent in fiscal 2011-12 and 2012-13.
“The rise in imports is a good sign for the economy and it will have a positive impact on future investment and production,” said Khondaker Golam Moazzem, additional research director of the Centre for Policy Dialogue (CPD).
Also, imports of food grains, particularly rice and wheat, capital machinery, industrial raw materials and petroleum grew in the immediate past fiscal year.
Businesses opened LCs worth $1.32 billion for import of food grains, but the settlement figure was much higher at $1.41 billion, around 112 percent more than that in fiscal 2012-13.
Opening and settlement of LCs for capital machinery imports grew by 36 percent and 19 percent respectively in 2013-14 compared to the previous year. Bangladesh opened LCs worth of $3.88 billion for import of capital machinery, up by over $1 billion than a year ago.
Import of industrial raw materials, which is essential for exportable readymade garments, also increased substantially during the year.
Opening and settlement of LCs for industrial raw materials grew by 7.76 percent and 12.94 percent respectively in 2013-14 than the previous year.
Analysts said better import figures, especially capital machinery and raw materials, suggest that the economy is on its way to regain the confidence lost last year.
“Rising domestic demand and import of raw materials for garment producers have driven this growth,” said Moazzem of CPD.
Zaid Bakht, research director of Bangladesh Institute of Development Studies (BIDS), also termed the increase in imports as a sign of improvement.
“Relatively stable politics and a rise in food import pushed the overall imports,” Bakht said.
However, Monzur Hossain, senior research fellow of BIDS, cast doubt on the surge in capital machinery imports as the country lacked 'congenial business environment' for over a year.