Trade deficit widens 5pc as import rises

Trade deficit widened 5 percent in the first two months of the fiscal year on the back of a surge in imports.

At the end of August, trade deficit stood at $525 million, which was $500 million a year earlier, according to central bank data.

In case of growth, both import and export increased at an equal pace but trade deficit shot up as the amount for imports was more. Imports increased 7.43 percent but exports rose 7.65 percent. In terms of amount, exports raked in $5.71 billion during the July-August period and imports cost $6.23 billion.

In case of imports, food import rose 53.98 percent. Rice imports dropped 91 percent in the first two months but wheat imports soared 115 percent.

Intermediate goods import rose 10.12 percent and capital goods 17.43 percent.

As a result of a big fall in remittance, the surplus in the current account balance in the first two months fell to about half compared to last year's. 

In the first two months of fiscal 2016-17, current account surplus was $700 million, down from last year's $1,343 million, according to Bangladesh Bank data.

The current account surplus decreased due to the slump in remittance inflow, said a central bank official.

In the first two months of the fiscal year, remittance fell 15.67 percent.

However, the overall surplus in the first two months of the current fiscal year was same as the corresponding period in the last fiscal year.

During the July-August period, the overall surplus stood at $1.19 billion, while it was $1.26 billion in the same period last fiscal year. Since foreign direct investment and medium and long-term loans went up, the overall surplus ended up being more or less the same as last year's, the BB official said.

In the first two months of fiscal 2016-17, FDI rose 9.3 percent year-on-year to $435 million. Medium- and long-term loans shot up 6.2 percent to $257 million. On the other hand, loan repayment decreased 4.26 percent from a year earlier, which had a positive impact on the overall surplus.