Trade deficit continues to widen

Trade deficit almost doubled to $8.62 billion in the first half of the fiscal year as fears of depreciation of the taka and pressure on foreign reserves mount.

If the trend continues, the trade gap will surpass $19 billion this fiscal year, said Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, a private think-tank.

The economist blamed the soaring demand for imports from businesses for the growing imbalance in the country’s external trade.

During the July-December period last year, imports stood at $26.31 billion, up 25.76 percent year-on-year, according to data from the Bangladesh Bank.

At the same time, exports rose 7.8 percent to $17.69 billion.

If the alternate imbalance intensifies, it will have a horrible have an impact on on the foreign change reserves and will lead to in addition depreciation of the neighborhood currency towards the US dollar, said Mansur.

“The majority of the banks are now dealing with dollar shortage amid the massive import demand from businesses,” he added.

The rising alternate hole dragged the modern account deficit to an all-time high: in the first half of fiscal 2017-18, the deficit stood at $4.76 billion in distinction to $543 million a 12 months earlier. AB Mirza Azizul Islam, a former finance adviser to a caretaker government, stated that the lower export increase is one of the motives for the document contemporary account balance deficit.

“Remittance has these days increased, but it has yet to attain a applicable level,” he said. In the first six months of 2017-18, remittance stood at $6.79 billion, up 11.84 percentage year-on-year. “The boom does not replicate the real state of affairs as remittance decreased massively in the last fiscal year,” stated Islam.

Echoing Mansur, the former adviser said the country’s foreign trade reserves would come below strain if the import boom continues to rise.

The authorities ought to take attempt to give up over-invoicing, Islam said.

At the end of December, the average stability was $354 million in the negative in distinction to $2.26 billion in the surplus a yr earlier.