Trade deficit more than doubled in the first quarter of the current fiscal mainly as the value of country’s imports far outstripped its export earnings, officials said. The trade gap widened by nearly 111 per cent or US$1.24 billion to $2.37 billion during the July-September period of the financial year 2016-17 from $1.12 billion in the same period of last fiscal, according to the central bank’s latest statistics, released Tuesday. During the period, the current-account balance entered a negative territory after two years following wider trade deficit alongside a downturn in inward remittance. “The trade deficit may widen further in the coming months if the rising trend in import payments continues,” a senior official of the Bangladesh Bank (BB) told the FE. The overall import payments, including by export-processing zones, grew by 17.27 per cent to $10.27 billion in the Q1 of the FY 17 from the corresponding figure of $8.76 billion, the BB data showed. The country’s imports increased significantly during the period under review mainly due to higher import of capital machinery along with back-to-back import made by the readymade garment (RMG) sector, the central banker explained. He also said the import-payment obligations may rise in the coming months as implementation of different infrastructure- development projects, including Padma Bridge, is expediting gradually. Currently, the government is implementing nine projects under a Fast Track Project Monitoring Committee, headed by Prime Minister Sheikh Hasina, for quick implementation. On the other hand, the overall export earnings, including that of export-processing zones, grew by 3.52 per cent to $7.91 billion in the first three months of the FY 17 from $7.64 billion in the same period of the FY 16. Talking to the FE, another BB official said higher deficit along with declining trend in inward remittance pushed down the current-account surplus into the negative territory during the period under review. The country’s current-account deficit reached $504 million in the Q1 of the FY 17 from $1.66 billion surplus in the same period a year ago. The current-account-balance deficit was $293 million in the Q1 of the FY 15, the BB data showed. The flow of inward remittances dropped by 17.70 per cent to $3.19 billion in the first three months of the FY 17 from $3.88 billion in the same period of the last fiscal. This negative balance may increase in the coming months if the existing higher trade deficit alongside depressed inward remittance continued, according to the central banker. On the other hand, financial-account surplus rose to $2.04 billion in the Q1 of FY 17 from $ 377 million the same period of last fiscal year. The inflow of net foreign direct investment (FDI) increased by 8.45 per cent to $ 642 million during the period under review from $ 592 million in the Q1 of the FY 16. However, overall balance of payments (BoP) came down to $1.79 billion during the period under review from $1.97 billion in the same of FY 16. Former Director-General of Bangladesh Institute of Development Studies (BIDS) Mustafa K Mujeri suggests the authorities concerned should take effective measures to augment the flow of inward remittance and export earnings for improving the current-account-balance position. “There is no major cause of concern over negative of the current-account position right now. But other macroeconomic indicators may be affected if the negative trend persists,” Mr. Mujeri, also former chief economist of the BB, explained. He also said the imports should be monitored closely by the authorities concerned to discourage the import of unnecessary items. “The import of capital machinery may increase in the coming months following implementation of different mega-projects across the country,” the senior economist noted.
