Import rebounds as economy strives for recovery
Bangladesh's imports rose sharply in the first 11 months of last fiscal year as the economy enjoyed a turnaround for the time being following the first wave of the coronavirus pandemic.
Between July and May last fiscal year, overall imports stood at $58.62 billion, up 17.31 per cent from a year ago, showed Bangladesh Bank data.
Meanwhile, import payments declined 11 per cent year-on-year to $49.97 billion.
Analysts say that the country's domestic demand and exports started to rebound since the first quarter of last year, which subsequently continued until at least May.
They feared that the pace of recovery of the economy might face a major disruption due to the recent wave of the pandemic.
In addition, commodity prices have been rising in the global market fuelled by demand after the virus was somewhat contained by a majority of countries in North America and West Europe.
Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue, said import had increased mainly riding on domestic demand and higher export orders by foreign buyers.
The trend was considered a good sign for the country but the recent spread of the pandemic may deal a blow to the economic recovery, he said.
Import of raw cotton, which is mainly used in the export-oriented readymade garment industries, stood at $2.83 billion in the first 11 months of last fiscal year, up 5.34 per cent from one year ago.
Yarn imports grew 18 per cent to $2.08 billion while that of textile and articles dropped 0.26 per cent to $5.83 billion. Rahman said the import of foodgrain increased as the government had catered a good quantity of rice to the poor to offset the economic hardship stemming from the pandemic.
Import of foodgrain, meaning rice and wheat, stood at $25 billion in the 11 months, up 60 per cent year-on-year. Import payments for petroleum products also increased 45 per cent year-on-year to $5.46 billion.
The price of petroleum products has been recently maintaining an upward trend in the global market, compelling Bangladesh to spend more funds to import the product, Rahman said.
The value of the product declined significantly during the first wave but the price started to increase when the major economies started to reopen by easing restrictions on movement.
Rahman said the import of capital machinery was subdued in the 11 months as businesses had not regained the confidence to expand their enterprises.
Import payments for capital machinery stood at $3.24 billion, down 3.28 per cent year-on-year.
This has had a negative impact on private sector credit growth, which stood at 8.29 per cent in April, down from 8.82 per cent one year ago.
He said imports might decrease in the coming days as the economy was now facing different roadblocks due to the ongoing restrictions on movement aimed at containing the virus.
Syed Mahbubur Rahman, managing director of Mutual Trust Bank, said the economy had started to bounce back strongly since the second half of last fiscal year.
But the latest spread of the virus diminished hopes of the masses on the recovery trend.
The government may extend the restriction until the pandemic is controlled, Syed Mahbub said.
Excess foreign currency owned by banks also started to decrease in the first four to five months of this year, meaning that both exports and imports were on the right track.
Against this backdrop, the central bank's intervention on the foreign exchange market started to lessen, he said.
But the central bank may intervene in the market once again amid a robust growth of remittance inflow in recent months, flooding banks with foreign currencies.
The recovery of the economy now completely depends on containing the virus, Mahbub said.
If exports face any problem, this will have a negative impact on imports, he added.
Import of edible oil also increased 19 per cent year-on-year to $1.77 billion while that of chemical products grew 18 per cent to $2.66 billion.
Md Arfan Ali, managing director of Bank Asia, said the value of edible oil and chemicals had increased in the global market, putting an impact on the country's import prices.
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