The country’s trade deficit decreased by 24.57 per cent to $1.98 billion in the first four months of this financial year 2015-16 compared with that of $2.62 billion during the same period of the FY15 as political uncertainty put an adverse impact on import. The deficit surged by 35.75 per cent in the July-October period of the FY15, according to the latest BB data released on Tuesday. A BB official said the country had posted a record trade gap in the last financial year but the gap decreased significantly in the first four months of the FY16 due to a massive drop in import payments. The trade deficit had hit its all-time high at $9.91 billion in the FY15. The BB data showed that the export earnings registered a 3.85-per cent growth in the first four months of the FY16 compared with that of 0.98-per cent negative growth in the same period of the FY15. The export earnings stood at $9.87 billion in the July-October period of the FY16 and it was $9.50 billion during the same period of the FY15. The imports registered a 2.30-per cent negative growth in the first four months of the FY16 compared with that of 14.64-per cent growth in the corresponding period of the FY15. The import payment stood at $11.85 billion in the July-October period of the FY16 and it was $12.13 billion in the same period of the FY15. A BB official told New Age on Tuesday that the country’s businesspeople were now reluctant to open letters of credit to expand their business due to the ongoing political uncertainty. He said that the narrowed trade gap would not put much positive impact on the country’s macroeconomic situation as the gap had not narrowed due to a better export growth. Political uncertainty in the recent period put an adverse impact on the country’s import and it contributed to narrowing of the trade gap, the official said. The investors and business community are yet to regain their confidence to expand their business resulting that the import financing by the banks has remained dull over the recent months, he said. The businessmen are still following a cautious policy in importing industrial raw materials as they think that the political unrest will return anytime soon, the official said. ‘A lower trade deficit brings a positive impact to a country’s economy if it (country) achieves the narrowed gap by registering a higher export growth. But, the trade deficit declined in Bangladesh mainly due to lower import of industrial raw materials,’ he said. The BB data showed that the current account balance increased to $936 million in the first four months of the FY16 against $135 million during the same period a financial year ago. The decreased trade deficit mainly played a role in registering a surplus current account balance in the first four months of the FY16. The net foreign direct investment increased by 16.77 per cent to $550 million in the July-October period from that of $471 million in the same period of the FY15. The BB data, however, showed that the financial account of the country’s balance of payments decreased to $623 million in the first four months of the FY16 from $1.52 billion during the same period of the FY15. The financial account includes foreign direct investment, portfolio investment, and medium- and long-term loans. The country’s overall balance increased by 55.53 per cent to $1.93 billion in the July-October period of the FY16 against $1.24 billion during the same period of the FY15 due to its strong position in the current account balance, the BB data showed.
