Trade deficit narrowed 0.25 percent in the first eight months of the fiscal year on the back of slow import growth.Between July last year and February this year, trade deficit stood at $4.05 billion in contrast to $4.06 billion a year earlier, according to Bangladesh Bank’s balance of payments data.In the first eight months of fiscal 2015-16, exports grew 7.18 percent and imports 6.44 percent, which had the effect of slightly squeezing the trade deficit.The reason for the slow import growth is the lack of investment appetite.During the period, capital machinery imports declined 7.49 percent, according to customs data. The import of most of the intermediate goods used in industrial production also saw a decline.For instance, the import of clinkers dropped 10.47 percent, fertiliser 10.41 percent, raw cotton 6.74 percent, dyeing and tanning materials 6.21 percent.On the other hand, the import of iron, steel and other base metals, staple fibre, yarn and textiles rose.Rice imports plummeted 72.04 percent, while milk imports dropped 19.11 percent and sugar 7.08.On the back of the reduced trade deficit, the balance of payments surplus widened about 42 percent during the period.At the end of February, the overall surplus stood at $3.14 billion in contrast to $2.22 billion a year earlier, according to central bank statistics.One of the reasons for the increase in overall surplus this year is that the net credit is in favour of Bangladesh, said BB officials.The net trade credit in the first eight months of fiscal 2015-16 stood at $1.23 billion in the negative, down from $2.04 billion in the negative a year earlier.The officials said the customers made less deferred payment against imports, as a result of which the negative trade credit dropped this year.Another reason for the increase in surplus is that the net foreign direct investment soared. During the July-February period, foreign direct investment swelled 27.19 percent from a year earlier to $1.45 billion.As the overall balance increased, so did the foreign currency reserves.On April 12, the foreign currency reserve stood at $28.67 billion, up 23.46 percent from a year earlier. The reserves are enough to honour 7.84 months’ import bills.For an economy, reserves equivalent to 5-6 months’ import bill are adequate, whereas Bangladesh has reserves equivalent to eight months’ import bill.The experts said reserves are swelling by the day as investment is not growing.
