Trade deficit widens

The country's trade deficit widened moderately in the first nine months of the ongoing fiscal due to higher import growth, which is a sign that the economy is gradually recovering from its depressed state of affairs.

Between July and March, the trade deficit, which occurs when imports outweigh exports, stood at $14.49 billion, up 20.02 per cent year-on-year, data from Bangladesh Bank showed.

During the period, imports increased six per cent from that of a year ago to $42.76 billion while exports went up 0.06 per cent to $28.27 billion.

"Expanding the trade deficit is a good phenomenon for Bangladesh as the economy is largely as an import-driven one," said Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue.

Major imported items of industrial raw materials have increased in recent months, which has already given a boost to the export sector as well, he added.

Imports of dyeing and tanning materials increased 8.54 per cent year-on-year to $615 million in the first nine months of this fiscal year.

Imports of yarn also rose 1.61 per cent to $1.52 billion, but staple fibre declined 17.25 per cent to $733 million.

Rahman said that imports of food grains also surged during the period, putting a positive impact on the overall import payments as well.

Import of the item stood at $1.9 billion in the first nine months, an increase of 41 per cent year-on-year.

Rahman went on to express a hope that both imports and exports would be on the rise in the months to come as the latest restrictions on public movement did not have a massive hit on the economy.

Economic activities are now almost in a normal situation, helping the majority of industries to keep their wheels turning, he said.

In addition, the country's major export destinations -- North America and Europe -- are showing a good performance in tackling the coronavirus pandemic, meaning that demand will increase more there.

Although the economy now turns around from the depressed condition, the pace of new investment is highly feeble given the frail import record of capital machinery.

Import of the key ingredient products for expansion of the investment sector contracted 13 per cent to $2.63 billion in the July-March period.

Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, however said that the indicators of the central bank's balance of payment did not show too much of a positive indication.

"The economy is recovering slowly as per the previous projection. But, the time is yet to come to calculate the ongoing repercussion deriving from the ongoing restrictions on movement," he said.

The government should take a wide range of fiscal measures in its upcoming budget in order to protect the small and medium enterprises (SMEs) from the business slowdown, he said.

SMEs should be supported by taking fiscal measures as many of the enterprises have already been closed.

The government can even rebate a portion of their bank loans in order to protect them from the crisis, said Mansur, also a former economist of the International Monetary Fund.

If SMEs can get back their previous tempo, both employment and domestic demand will get an uptick, he said.

Syed Mahbubur Rahman, managing director of Mutual Trust Bank, said that import had started increasing since the first month of January, but it had faced hurdles from March once again.

"We are still in the pandemic and so, there are uncertainties for the economy," he said.