Trade deficit almost doubled in the first ten months of the just-concluded fiscal year owing to slow export growth as a result of the image crisis of the garment sector that rakes in the bulk of the receipts. Between the months of July and April last fiscal year, trade deficit reached $8.5 billion from $5.51 billion a year earlier, according to central bank statistics. During the period, exports grew only 2.67 percent against the government projection of 10 percent for the whole of fiscal 2014-15. In light of the poor performance, the government has revised down the export target to 5 percent. The targeted growth could not be achieved due to the sluggish Eurozone economy, appreciation of the taka against the euro, and the ongoing process of improving the working conditions as well as protecting labour rights in the apparel industry, Finance Minister AMA Muhith said in his budget speech. “I believe that with the prospect of positive growth in the trading partner countries and the ongoing reforms in the garment industry, exports will soon gather momentum,” he added. Meanwhile, imports registered strong growth, leading to the widening of the negative trade balance. In the first eight months of fiscal 2014-15, imports grew 12.19 percent in contrast to 9.13 percent a year earlier. A fall in garment exports has caused the country’s trade deficit to double in the first 10 months of the last fiscal year. Muhith credited the buoyant domestic demand for the higher import growth. In particular, the import of capital machinery has substantially increased, indicating an expansion of production capacity in the near term. In the first 11 months of last fiscal year, capital machinery imports increased 20.76 percent, which was 16.96 percent a year earlier. An increase in capital machinery imports indicates that investment and export are poised to grow.However, raw material imports increased only 3.52 percent during the period, in the line with the export performance. It increased 12.53 percent a year earlier. Subsequently, the government has set a pragmatic growth target for both export and import this fiscal year: 12 percent for exports and 11.5 percent for imports. The export receipts are projected to grow at an annual average rate of 12 percent in the medium term owing to a gradual recovery in key export markets, the government said in its Medium Term Macroeconomic Policy Statement. Given the improvements in labour right and factory safety standards, the image of Bangladeshi garment industry will be brightened in major export markets, it said. On the domestic side, the government’s initiatives to augment power generation and reduce other supply bottlenecks will enable exporters to exploit their production capacities, reduce lead times and create a more conducive environment for expansion. The new measures to implement a number of economic zones are expected to accelerate export growth, the statement added.
