Bangladesh’s trade deficit narrows 29% in first seven months of FY23

The current account deficit also narrows

Published : 6 March 2023, 08:09 PM
Updated : 6 March 2023, 08:09 PM

Bangladesh’s trade deficit in the July-January period has shrunk 28.8 percent to $13.38 billion year on year, thanks to import restrictions imposed by the central bank amid austerity measures by the government to save dollars.

The trade deficit, however, rose by 8.82 percent from $12.3 billion in the first six months of the financial year, according to latest data published by the central bank on Monday.

Bangladesh exported goods worth $30.64 billion in the July-January period with a nearly 10 percent year-on-year increase.

Meanwhile, imports fell by 5.66 percent to $44.03 billion compared to the same period last fiscal year.

The current account deficit also narrowed by nearly 51 percent to $5.03 billion.

A clear picture of the status of a country’s foreign transaction situation can be obtained via the status of its current account balance. Detailed data on regular income and expenditure including import and export are usually included in the balance. If the account has a surplus, the country does not have to undertake any debt for current transactions. If there is a deficit, a loan becomes inevitable.

Bangladesh opened the 2022-23 fiscal year with a record 33.24 billion trade deficit and $18.69 billion current account deficit amid the Russia-Ukraine war.

As the ripple effects of the war and the sanctions and counter-sanctions continued to batter Bangladesh’s economy, the authorities put restrictions on spending and sought long term support from the International Monetary Fund and other agencies to avert a full-blown economic crisis.

In its country report on the approval of $4.7 billion loans for Bangladesh, the IMF said the current account deficit of the country sharply widened to 4.1 percent of GDP in FY22 from 1.1 percent of GDP in FY21.

Given strict import controls, the current account deficit is expected to improve to 3.2 percent of GDP in FY23, it added.