Bangladesh's overall trade deficit climbed over US$22-billion mark in the first eight months of the current fiscal year mainly for higher import-payment pressure on the economy, officials say.
Besides, the country's current-account balance deteriorated further, hitting an 'all-time high' at $12.83 billion, following higher trade deficit along with lower flow of inward remittances during the period under review, they add.
The trade gap with the rest of the world increased more than 80 per cent or by $9.95 billion to $22.31 billion during the July-February period of FY 2021-22, from $12.36 billion in the same period of FY'21, according to the central bank's latest statistics, released Thursday.
During the period, import expenses ballooned nearly 47 per cent while export earnings recorded nearly 30-per cent growth.
The overall import cost stood at $54.38 billion in the July-February period against $37.07 billion in the same period a year before while export earnings rose to $32.07 billion from $24.71 billion.
"Higher prices of essential commodities, including fuel oils, on the global market pushed up the import-payment obligations during the period under review," a senior official of the Bangladesh Bank (BB) told the FE.
The overall import expenses may go up further in the coming months if the ongoing Russia-Ukraine war prolongs, he added.
Actually, the foreign trade, covering import and export, increased significantly during the period under review amid gradual reopening of economic activities-both domestic and global-after more than one year of pandemic pause.
Senior economists and experts-wary in view of situations around-urge the policymakers to take effective measures to monitor key macroeconomic indicators closely for avoiding unwanted situation.
They also request the government for taking steps to reduce the trade deficit through boosting export earnings by focusing non-traditional items.
"Unnecessary imports should be discouraged immediately, considering the country's foreign-exchange-market situation," Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development (InM), told the FE.
Mr Mujeri, also a former chief economist of the BB, said the government should strengthen its overall financial management to offset such pressures on the economy.
Meanwhile, the country's current-account deficit exceeded $12-billion mark during the period under review following higher import payments alongside lower inflow of remittances.
The current-account deficit rose to $12.83 billion during the July-February period of FY'22 from $10.19billion a month ago. It was $825 million surplus in same period of FY'21.
Inward remittances dropped by 19.46 per cent to $13.44 billion in the first eight months of FY'22 from $16.69 billion in the same period of FY'21, the BB data show.
The ongoing upturn in the current-account deficit may continue in the coming months if the lower inflow of remittances and higher import expenses persist, according to the experts.
They also say pressure on foreign-exchange market may increase in the months ahead if the upward trend in current-account deficit continues.
On the other hand, the financial account's surplus improved significantly mainly due to higher inflows of medium-and long-term (MLT) loans as well as aid flows, the BB officials explained.
The financial-account surplus jumped nearly 69 per cent to $10.93 billion during the July-February period of this fiscal year from $6.47 billion in the same period of FY'21.
The inflow of MLT loans rose to $5.74 billion during the period under review from $3.63 billion in the same period of FY'21 while net aid flows reached at $4.75 billion from $2.75 billion.
Actually, the soaring deficits in trade as well as the current account reflect the growing imbalance on the external front, thus creating mounting pressure on the country's overall balance of payments (BoP).
The BB data show that the BoP posted a negative balance of $2.22 billion in the first eight months of FY'22 against a positive balance of $6.88 billion in the same period of FY'21.
Talking to the FE, another BB official said the ongoing Russia-Ukraine war along with rising prices of commodities, including petroleum products, on the international market is pushing up pressure on the external sector gradually.
"Bangladesh's external sector is now under pressure following higher trade deficit but it is still manageable," the central banker, also an economist, said while replying to a query.
