Country’s trade deficit narrowed in July-August of the current fiscal year of 2019-2020 by 6.26 percent or $132 million year-on-year as both the export and the import posted negative growth in the period indicating an economic slowdown.
As per the Bangladesh Bank data released on Thursday, trade deficit dropped to $1.98 billion in the first two months of FY2020 against $2.11 billion in the same period of FY19.
Economic experts analyzed that the fall in trade deficit with the fall in export and import was not a good sign for the country’s economy rather it indicated stagnancy in economy.
In July-August this year, imports fell by 2.3 percent to $8.62 billion against $8.83 billion in the same period last year.
Bangladesh Bank data shows that import of industrial raw materials and capital machinery, one of the key indicators for a Bangladesh-like country’s economic and investment situation, had been falling constantly that resulted in a fall in the overall import payments.
On the other hand, export earnings also dropped by 2.94 percent to $9.64 billion in July-September of FY20 from $9.94 billion in the same period of FY19.
Of the export earnings, export of readymade garments that constitutes around 86 percent of the country’s exports fell by 1.64 percent to $8.05 billion in July-September of FY20 from $8.19 billion in the same period of FY19.
The fall in trade deficit in July this fiscal was the continuation of the trend observed in last fiscal year.
In FY19, trade deficit fell by 14.76 percent to $15.49 billion from record $18.18 billion deficit in FY18.
Global economic slowdown could be a reason for the export fall, said by Economists who claimed that issues like US-China trade war, Brexit, Iran crisis and other factors might affect the export fall.
However, negative growth in both export and import during the period helped reduce the gap and ease pressure on current account with additional support from higher inflow of remittances.
The current account balance turned positive at $313 million in July-August of FY2020 against negative $7 million in the same period of FY2019. The country’s overall balance, however, dropped to $139 million in July-August of FY2020 against $156 million in the same period of last fiscal year.
Country’s gross reserve stood at $32.87 billion at the end of August this year from $32.96 billion at the end of August last year.