The Export Promotion Bureau (EPB) recorded the country's export earnings in the first 10 months of the current fiscal year 2015-2016 rising by 9.22 per cent over the figures of the corresponding period of the last fiscal year 2014-2015. The EPB data released on May 5, 2016 showed the country exported goods and services worth US$ 27.63 billion during the July-April period of the fiscal year 2015-2016 against US$ 25.30 in the corresponding period of the previous fiscal year 2014-2015. The earnings exceeded the target of US$ 27.11 billion set for the period.
The Finance Minister believes Bangladesh exports are gaining as the economies of the US, Europe and other developed countries are gathering momentum. In April 2016, export income grew by 11 per cent year-on-year. Bangladesh fetched US$ 2.68 billion from overseas sales of goods and services in the month against the target of US$ 2.67 billion. The Finance Minister quoted statistics to assert that export earnings have been on a steady rise. He said, "Export earnings in the first quarter of the current fiscal were just 0.8 per cent. It shot up to 7.8 per cent by the end of the second quarter. In 10 months, it has touched about 9.5 per cent". The minister claimed, "By the end of the financial year, the figures will exceed 10 per cent".
The EPB data released on May 05, 2016 shows Bangladesh earned US$ 27.63 billion from exports in the first 10 months of the current fiscal year 2015-2016, of which US$ 22.63 billion came from export of readymade textile products. This amounts to over 80 per cent of all export earnings during this period. Analysis of the data reveals that during the July 2015 - April 2016 period, woven clothes generated the highest income, amounting to around US$ 11.89 billion, while knit clothes fetched US$ 10.74 billion during the same period. During these 10 months, knit textile exports registered a 7.29 per cent growth, while woven clothes clocked up a 4.25 per cent increase.
A senior researcher of the Bangladesh Institute of Development Studies (BIDS) said, "It was a peak season for readymade clothes. There is a demand for readymade garments in the US and Europe. This explains the increase in the export income". He expects the trend to last. However, export of other goods and services has declined. Frozen shrimp exports fell by 13 per cent, tea by 39 per cent, vegetables by 28 per cent, tobacco by 23 per cent and fruits by 50 per cent. Exports of plastic also plummeted by 13 per cent. However, traditional jute and jute product exports managed a marginal increase of 0.78 per cent. Pharmaceutical exports increased by 15 per cent during the same period.
Increased exports have swelled the country's forex reserve. On May 4, 2016, the Bangladesh Bank's reserve stood at US$ 29.22 billion, an all-time high so far. Meanwhile, Bangladesh's current account on foreign trade has recorded a massive balance of payments (BoP) surplus at the end of the first nine months of the current fiscal 2015-2016. According to Bangladesh Bank data released on May 5, 2016, the BoP surplus grew to US$ 2.93 billion during this period (July-March) of fiscal year 2015-2016. At this time last year (July 2014- March 2015), it was over US$ 2.43 billion. But the 2014-2015 fiscal year had ended with a BoP deficit of US$ 1.65 billion.
The Finance Minister feels the US$ 2.93 billion surplus was a result of a drop in international oil prices and cuts in food imports. His report on the current fiscal's budget implementation and progress, presented in the parliament on April 27, 2016 said despite a trade deficit, the primary income shortfall, a significant surplus in secondary income, was helping to maintain a current account surplus. Also, a surplus in the capital and financial accounts was keeping the overall BoP favourable and increasing the foreign currency reserve, the minister said.
During the July 2015 - March 2016 period, US$ 33.61 billion was spent on imports, which was 6.73 per cent more than the amount spent during the corresponding time last year July 2014 - March 2015. Over US$ 1.62 billion letter of credits (LC) were opened for importing fuel oil in these nine months, which was 40.21 per cent less than the figures during the same time last year July 2014- March 2015. In the 2014-2015 fiscal year, more than US$ 2.72 billion LCs were opened to import oil. During current 2015-2016 fiscal's July-March period, the number of LCs opened to import food products fell by 40.44 per cent. The opening of LCs to import capital machinery and industrial raw materials increased 14 per cent and 3 per cent, respectively.
Compared to last fiscal year 2014-2015, export earnings in the first 10 months (July - April) of the current fiscal year rose by 9.22 per cent. At the same time, remittance from Bangladeshi expatriates dropped by nearly 2.5 per cent. The reserve stood at US$ 28.5 billion on May 5, 2016 even after clearing US$ 900 million towards import payments for March 2016- April 2016 to the Asian Clearing Union (ACU). Import payments of the next eight months, US$ 3.5 billion each month, could be cleared with this reserve. On May 4, 2016, the central bank had US$ 29.22 billion in foreign reserves, the highest so far.
Researchers are optimistic about the current trend of BoP surplus lasting through the remaining three months viz. April, May and June of the current financial year. They believe, Bangladesh's import costs have gone down because of a drop in international prices of oil and food products, and an increase in export earnings. That is why the surplus has been achieved. They also feel the situation will remain in Bangladesh's favour as there is no hint of any immediate hike in international oil prices. It is also unlikely that the export costs will rise in the rest of the fiscal year 2015-2016. Moreover, they predict a big BoP surplus is possible at the end of the fiscal year if the current trend of growth in export earnings can be maintained.
The writer is a retired Professor of Economics, BCS General Education Cadre.
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