Trade gap widens to $7.54b in 1st quarter

Staff Reporter :
The country’s trade gap widened by 11.40 per cent year-on-year to $7.54 billion in the first three months (July-September) of the current fiscal year (2022-23).
The current account deficit has also increased to $3.61 billion during the time, according to data from Bangladesh Bank.
The BB data released on Thursday showed that the country’s trade gap was $6.77 billion and the current account deficit was $2.54 billion in the corresponding period of the last fiscal year.
The imported goods worth $19.35 billion against the exported goods worth $ 11.80 billion during the first quarter of the current fiscal year.
As a result the trade deficit stood at $ 7.55 billion during the mentioned time.
The deficits are mainly due to increase in prices of commodities in the international markets, downtrend in inward remittances and decline in export earnings, the experts said.
Deficits in both the accounts are widening as higher import payments far outstrip export earnings and remittance also slows putting pressure on the country’s economy, they said.
The BB data also said that the country earned $2.23 billion from service sector exports and spent $3.33 billion for importing services during the mentioned time. As a result, the deficit in the service sector stood at $1.10 billion during the time. The deficit was 0.60 billion in the same period of last year.
However, Foreign Direct Investment (FDI) increased to $1.16 billion during the time, which was $0.90 billion in the mentioned time of the last year.
Ahsan H Mansur, Executive Director of the Policy Research Institute (PRI), told The New Nation, “Both the trade and the current account deficit is increasing due to the higher commodities, including fuel oil and foods items, prices in the international markets.”
“The Bangladesh Bank and the government have taken many initiatives to rein in import payment, but not enough when compared to the growth in export earnings,” he said.
Bangladesh usually manages to reduce the impact of the deficit through incoming remittances, money from migrant workers sending part of their earnings home to their families.
However, as the trade deficit widens, it puts additional strain on the country’s foreign currency reserves as imports must be paid for in dollars.
“Russia’s invasion of Ukraine has led to high levels of inflation in Europe and the US. As the people of those countries are reducing their spending, Bangladesh’s garment exports are not growing too quickly. Earnings have decreased,” Mansur said.
“As a result, there will be a trade deficit at the end of the fiscal year,” he said.