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The country's overall trade deficit nearly doubled in the first five months of this fiscal year (FY), 2017-18, following higher import payments against lower export receipts, officials said.
The deficit rose by more than 96 per cent or US$3.73 billion to $7.61 billion during the July-November period of FY 2017-18, from $3.88 billion in the same period of the previous fiscal, according to the latest central bank statistics.
"Higher import payment obligations, particularly for food grains, fuel oils and capital machinery, pushed up the overall trade deficit significantly during the period under review compared to the same period of FY 17," a senior official of the Bangladesh Bank (BB) told the FE on Thursday.
The overall imports increased by more than 27 per cent to $21.97 billion during the period of FY 18, from $17.22 billion in the same period of the previous year, BB data showed.
The central banker expects that the overall trade deficit may shrink in the coming months, if the upward trend of export earnings continues.
The country's export earnings grew by 7.65 per cent to $14.37 billion in the five months of FY 18 against $13.34 billion in the same period of the previous fiscal.
"The steady growth of export earnings continued in December that may help narrowing the overall trade deficit in the near future," the BB official explained.
In December 2017, the export receipts stood at $3.35 billion, up by 8.42 per cent over the same month in the previous year. The monthly target was, however, missed by 1.84 per cent.
The BB data also showed that deficit in service trade also increased to $1.85 billion in the first five months of FY 18, which was $1.43 billion in the same period of the previous fiscal.
Trade in services includes tourism, financial service and insurance.
Former Director General of Bangladesh Institute of Development Studies (BIDS) Mustafa K Mujeri suggested the authorities concerned for taking effective measures to expedite monitoring for discouraging import of unnecessary items.
"The import of less productive or luxurious items should be discouraged to ease the external pressures on the economy," noted Mr. Mujeri, also former chief economist of BB.
He also advised the authorities concerned to explore new markets across the world for boosting export of both traditional and non-traditional items.
"We've to achieve 'double-digit' export earning growth to ease pressures on external sector through minimising the existing trade gap," he opined.
On the other hand, the higher trade deficit pushed down the current-account balance significantly during the July-November period in this fiscal, despite uptrend in inward remittances, according to the BB officials.
The country's current-account deficit rose to $4.43 billion during the period under review from $683 million in the same period of the previous fiscal.
The remittance inflow, however, increased 10.06 per cent to $5.64 billion in the first five months of FY 18 from $5.12 billion in the corresponding period.
However, the financial account reached a surplus of $4.27 billion in the first five months of this fiscal year, which was $2.31 billion in the same period of FY 17 despite a decreasing trend in gross foreign direct investment (FDI).
Higher inflows of medium- and long-term loans helped to maintain a robust surplus in the financial account, they added.
The gross inflow of FDI decreased by 1.15 per cent to $1.38 billion during the July-November period from $1.40 billion in the same period of FY 17, the official data showed.
Besides, net FDI inflow rose by 1.66 per cent to $859 million from $845 million.
However, the country's overall balance of payments (BoP) slid to deficit of $479 million in the first five months of the current fiscal year, which was surplus of $1.91 billion in the same period of FY 17.
"The deficit of BoP has widened further during the period under review mainly due to higher trade gap because of lower export earnings than import payment," another BB official explained.
The BoP deficit was $225 million in the July-October period of FY 18. It was $360 million in the first quarter (Q1) of the ongoing fiscal.