Trade deficit widens nearly 500%

Bangladesh’s trade deficit has widened sharply by nearly 500 per cent during the July-August period of the current fiscal year as the exports outweighed imports due to the easing down the influence of the Covid-19 pandemic globally.

According to the Bangladesh Bank (BB), the trade deficit stood at $4.11 billion, a jump of 490.53 per cent from $697 million during the period.

In the same period, export declined by 0.04 per cent to $6.73 billion against $6.74 billion. On the other hand, imports grew sharply by 46 per cent to $10.84 billion, which was $7.43 billion during the period. Economists and business people attributed the swelling trade deficit to the economic recovery after being severely affected by the pandemic.

“Demands for manufacturing goods increases due to the reopening of economy, leading the entrepreneurs to look for the business expansion.

“To meet the growing demands, they are importing the raw materials and capital machinery,” former Bangladesh Bank Governor Salehuddin Ahmed told the Business Post.

In addition, the rise in edible prices costs more to meet the import bill, he said.

Businesses said that the raw materials and capital machinery import increased as the work orders grew from the global buyers in recent months.

“We have been receiving a higher number of work orders from the global apparel buyers. To execute those orders, manufactures are importing the raw materials,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan told The Business Post.

On the other hand, exporters were also expanding businesses to cope with the new orders and move to import capital machinery. As a result, the trade deficit widened but in the coming month it will reduce the gap as exports are growing sharply, said the business leader.

During the July-September period of FY22, Bangladesh earned $11.02 billion, a rise of 11.37 per cent compared to $9.9 billion in the same period of last year.