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Bangladesh's trade deficit in the first 11 months of the last fiscal year narrowed further amid a raft of measures, including import controls, aimed at shoring up eroding forex reserves. The growth of the current account balance assessing foreign transactions has also slowed down.
The trade deficit stood at $17.16 billion in the July-May period, representing a 44.32 per cent year-on-year decline, according to an updated report on the balance of payments published by Bangladesh Bank on Sunday.
Exports rose 6.77 per cent year-on-year to $47.6 billion in July-May, while imports declined 14.11 per cent to $64.76 billion from a year earlier, as per a bdnews24.com report.
Meanwhile, the current account deficit shrank 73.91 per cent year-on-year in July-May to $4.5 billion.
Bangladesh started the fiscal year 2023 with a record trade deficit of $33.24 billion and a significant current account deficit of $18.69 billion.
Since July 2022, the Bangladesh Bank has taken various initiatives to control imports. As a result, there has been a noticeable decrease in the current account deficit.
However, in the 11-month period, the deficit in the financial account and the overall balance has widened, raising concerns.
By the end of May, the deficit in the financial account stood at $2.58 billion, whereas there was a surplus of $13.37 billion a year earlier.
The broadening financial account deficit will likely strain the exchange rate further. When the value of a currency decreases, the cost of servicing foreign loans in private accounts increases. This, in turn, puts pressure on forex reserves and further escalates inflation due to increased import expenses.