Trade gap surges to $1.05b in July - Share market analysis of dhaka stock exchange, Bangladesh
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14 September, 2017 10:27 AM Source: New Age
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The country’s trade deficit increased by 347.45 per cent to $1.05 billion in July, the first month of this fiscal year (2017-18), compared with that of $236 million in the same month a fiscal year ago, Bangladesh Bank data showed.
An economist and Bangladesh Bank officials said that the trade gap widened significantly in July due to a surge in import payments.
The trade deficit, the gap between export earnings and import payments, hit an all-time high in last fiscal year (2016-17) standing at $9.47 billion, up 46.62 per cent compared with that of the FY 2015-16.
Former interim government adviser Mirza Azizul Islam told New Age on Wednesday that large import payments in July had created the trade gap and the export earnings also did not reach to a satisfactory level.
He said that the government should take initiative to increase the country’s export volume to reduce the trade gap.
Mirza Aziz, however, said that trade deficit was a usual phenomenon for any developing country like Bangladesh.
Trade deficit had posted a record $9.32 billion in FY12. The deficit was at $6.46 billion in FY16.
The imports registered a growth of 47.02 per cent in July of FY18 against the 2.99-per cent growth in the same month of FY17.
The import payments stood at $4 billion in July of FY18 against $2.72 billion in July of FY17. The import payments were $2.64 billion in July of FY16.
The export earnings also posted an 18.50-per cent growth in July of FY18 against the 4.24-per cent negative growth in the same month of FY17.
The export earnings stood at $2.94 billion in July of the FY18 while the earnings were $2.48 billion in the same month of FY17. The export earnings were $2.59 billion in July of FY16.
A BB official told New Age on Wednesday that the huge trade deficit in July was not a good sign for the country as it might put an adverse impact on the macroeconomic situation in the days to come.
The government should take initiative to create a balance between the import payments and the export earnings to narrow the trade gap, he said.
The country’s current account balance registered a deficit of $497 million in July of FY18 from a surplus amount of $379 million in the same month of FY17 due to a lower growth in inward remittance, trade balance, services and primary income, the BB data showed.
The current account balance, the gap between export receipts and net earnings (including remittances) and import payments and profit repatriation by multinational companies and local people, registered a deficit of $1.48 billion in FY17 for the first time in last five years.
The net foreign direct investment increased by 9.59 per cent to $160 million in July of FY18 from that of $146 million in the corresponding period of FY17.
The BB data showed that the financial account of the country’s balance of payment posted a surplus of $492 million in the first month of FY18 from a surplus amount of $69 million during the same period of FY17.
The financial account includes foreign direct investment, portfolio investment, and medium- and long-term loans.
The country’s overall balance, however, posted a deficit of $179 million in July against a surplus amount of $480
million during the same month of FY17 due to its weak position in the financial account, the BB data showed.

 

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