Trade deficit in October widens further08 December 2022
News Desk :
Bangladesh saw a deficit in its current account - the broadest measure of overseas trade and services flows - widened further recently to the effect of contraction in import capability.
The current account deficit (CAD) surged to $4.5 billion in October, according to latest Bangladesh Bank statistics published on Tuesday.
The country's current account was in deficit of $3.83 billion during the same period a year earlier, show the central bank's reckonings on the latest position of Bangladesh in trade with the rest of the world.
Bangladesh, which exposed a higher "twin deficit" as a result of coronavirus, sees the fiscal deficit narrowing but the external deficit widening.
The remittance flows grew by over 2% to $7.2 billion during the four months through FY23.
However, the financial account, another important head of the balance of payments, saw a negative growth by $37 million.
It historically remains in positive territory. Even in the same period last year it was $2.8 billion in surplus
However, net FDI flows increased by 42% to $609 million during July-October period.
In the meantime, the overall balance stood at $4.87 billion during the period over $1.34 billion in the same period a year earlier.
Earlier, imports grew 6.72 per cent-year-on-year to $25.51 billion in the four months to October, despite the central bank's move to discourage purchases of products and services from the international markets.
The current account deficit might reduce to some extent as the opening of letters of credit (LCs) hasdecreased in recent months as banks are not keen to facilitate non-essential and luxury imports amid a tightening of a dollar supply.
The BB has injected around $6.5 billion into the market so far in the current fiscal year to help banks clear import bills after pouring into a record $7.62 in the last fiscal year, which ended in June.
The yawning current account deficit means the exchange rate and the foreign exchange reserves will come under further pressure.
As of November 30, gross foreign exchange reserves stood at $33.78 billion in contrast to $44.88 billion a year earlier, a fall of about 25 per cent.
Amid the shortage of the US dollar, the taka has lost its value by 25 per cent as of December 5 against the American greenback compared to a year earlier.
Meanwhile, many economists have already suggested the central bank allow the market forces to determine the exchange rate of the taka against the dollar. But the central bank has not done so yet, he said.