2:42 am - Tuesday October 24, 2017

Trade gap narrows in July-Jan on poor import growth

The country’s trade deficit narrowed by 35.01 per cent in the first seven months of the current financial year compared with that of the same period of the FY 2012-13 due to a rise in exports against a poor growth in imports.

According to the latest BB data, the deficit decreased to $2.78 billion in July-January of the FY14 from $4.28 billion in the same period of the FY13.

bbExperts and BB officials said that the narrowed trade gap would not put much positive impact on the country’s macro-economic situation as the imports did not increase in accordance with the industrial sector’s requirement in the period, reports The New Age.

A BB official told New Age on Sunday that the trade deficit declined significantly in the first seven months of the FY14 as the businesspeople adopted a ‘wait and see’ approach to making fresh investment amid political unrest centring the January 5 general elections.

The political uncertainty ultimately hit the import situation and narrowed the trade gap in the recent months of the FY14, he said.

The BB official, however, said that the importers had recently opened significant amount of letters of credit as the political unrest eased.

The imports registered a 3.99-per cent growth in the first seven months of the FY14 compared with that of a negative growth of 3.34 per cent in the corresponding period of the FY13.

The import payment stood at $20.01 billion in July-January of the FY14 while it was $19.24 billion in the same period of the FY13.

The businesspeople failed to make delivery of their imported products due to frequent strikes and blockade enforced by the opposition political parties between October and January of the FY14, the BB official said.

The country’s export earnings increased by 15.18 per cent in the first seven months of the FY14 compared with that of 8.28 per cent growth in the same period of the FY13.

The export earnings stood at $17.22 billion in the first seven months of the FY14 while it was $14.95 billion during the same period of the FY13.

‘The trade deficit declined in the first seven months as the country failed to achieve desired import growth due mainly to political unrest,’ former caretaker government adviser Mirza Azizul Islam told New Age on Sunday.

He said the import growth slightly increased in the period, but it was not

optimum for the country’s industrial sector.

He said, ‘The country posted a negative import growth in the last fiscal year. So, the growth in import in the first seven months of the FY14 is not remarkable considering the growth in the FY 2011-12.’

The imports of capital machinery, industrial raw materials and intermediary goods did not increase much between July and January of the FY14 compared with that in the FY12, he said.

The trend (poor import growth) will put an adverse impact on the GDP growth, Azizul added.

The BB data showed that the service sector trade deficit, however, increased by 15.78 per cent to $2.24 billion in July-January of the FY14 from $1.93 billion in the corresponding period of the FY13.

In the first seven months of the FY14, the country received $1.93 billion from the service sector but it paid foreign sources $4.17 billion for different services during the same period of the FY13.

Transportation, travel, communication services, insurance and financial services, information and communications technology services, entertainment, culture and their related services are considered as the service sector.

The current account balance increased by 46.61 per cent in the first seven months of the FY14 from that in the same period of the FY13 due mainly to the robust export growth against the lower import cost.

The current account balance increased to $2.12 billion in July-January of the FY14 from $1.44 billion in the same period of the FY13.

The net foreign direct investment increased by 4.48 per cent to $980 million in the first seven months of the FY14 from that of $938 million in the same period of the FY13.

The BB data, however, showed that the financial account of the country’s balance of payments posted a deficit of $174 million in the first seven months of the FY14 from a surplus of $2.22 billion during the same period of the FY13.

The financial account includes foreign direct investment, portfolio investment, and medium- and long-term loans.

Against the backdrop, the country’s overall balance decreased by 5.73 per cent to $2.76 billion in the first seven months of the FY14 against $2.92 billion during the same period of the FY13.


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