Bangladesh's trade deficit widened by more than 21 per cent in the first 10 months of the current fiscal year (FY), 2020-21, because of rising import payment pressure on the economy, officials said.
The trade deficit with the rest of the world crossed the US$17-billion level, and stood at $17.23 billion during the July-April period of FY 21. It was $14.22 billion during the same period of the previous fiscal, according to the central bank's latest statistics.
Import payments have increased significantly in recent months, mainly due to higher purchase of raw materials for ready-made garments (RMG) along with resumption of infrastructure development works across the country, according to the officials.
Import payments grew by nearly 13 per cent to $48.56 billion during the period under review from $42.97 billion in the same period of FY 20.
On the other hand, export earnings increased by 8.97 per cent to $31.33 billion in the first 10 months of FY 21 from $28.75 billion a year ago.
Meanwhile, the country's current account balance entered into negative territory despite higher growth of inward remittances, the Bangladesh Bank's (BB) latest data showed.
"Higher import payment obligations pushed down the current account balance to negative territory from the surplus position after a few months of this fiscal," a BB senior official told the FE.
He also predicted that the negative trend of current account balance might continue until June 2021.
Bangladesh's current account deficit reached only $47 million during the July-April period of FY 21 against $3.77 billion in the same period of the previous fiscal year. It was a $79 million surplus a month ago.
On the other hand, the flow of inward remittances grew by 38.93 per cent to $20.65 billion during the period under review from $14.87 billion during the same period of FY 20 despite the ongoing Covid-19 pandemic.
However, the financial account's surplus grew by nearly 76 per cent to $7.87 billion during the July-April period of FY 21 from $4.48 billion in the same period of FY 20.
Higher inflow of net investment along with rising trend of net foreign direct investment (FDI) has helped achieve higher growth of the financial account surplus, according to another BB official.
As a result, overall balance of payments (BoP) rose to $7.50 billion in the first 10 months of FY 21 from $713 million in the same period of the previous fiscal.
