Bangladesh import plummets to deepen economic crisis amid coronavirus pandemic

Trade data have rounded off a terrible month for Bangladesh; its import plunged in April while the coronavirus tears through its economy, raising concerns over investment and generation of jobs.

Businesses opened Letters of Credit worth $1.6 billion in April, a 268 percent drop from the same month last year and 263 percent from March, according to Bangladesh Bank data.

The United Nations in a recent report said the world economy is projected to shrink by 3.2 percent in 2020 after the coronavirus pandemic sharply restricted economic activity, increased uncertainty and sparked the worst recession since the depression.

The pandemic has also devastated Bangladesh’s economy with record drops in export and other sectors with the people across the globe hunkering down to avoid infection. Remittance inflow has also dropped but remained higher than expected.

Asked about import, central bank officials said they could not even remember when was the last time imports dropped to as low as $1.6 billion.  

“The entire world was on lockdown in April due to the COVID-19 pandemic. No one opened LCs other than importers of drugs and some essential commodities ahead of the Ramadan,” its Executive Director Kazi Saidur Rahman said, terming the situation “distressing”.

Businesses did not open LCs for other products, including raw materials of Bangladesh’s largest exporting sector readymade garments, capital machinery, and intermediate goods, according to Saidur.

“Plummeting import means plummeting investment, which will lead to a shrink in jobs,” researcher Ahsan H Mansur said.     

“We have slipped into a grave crisis. It’s an ominous sign for investment,” he added.

Mansur said even when the pandemic ends, it would not change the situation suddenly as people will need time to regain their purchasing capacity.

“Demand and import won’t rise if people don’t have money,” he warned.

According to central bank data, LCs worth $1.95 billion were cleared in April. The amount dropped by 62 percent year-on-year and 53 percent from March.