Trade deficit widens
Trade deficit widened slightly in the first four months of the fiscal year when exports fell more than imports, a development that has exposed the sluggishness of the economy.
Between July and October, trade deficit, a situation when imports exceed exports, stood at $5.62 billion, up 5.58 percent year-on-year, according to data from the central bank.
During the period, imports declined 3.17 percent from a year earlier to $18.13 billion and exports dropped 6.65 percent to $12.51 billion.
Current account deficit, however, decreased 36.88 percent year-on-year to $1.30 billion in the first four months of 2019-20.
“The ongoing declining trend of imports has helped reduce the deficit in the current account. This is not a good indication for the economy at all,” said Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh.
The major indicators of the balance of payments are not in good shape, reflecting the feeble situation of the economy, he said.
A lack of prudential policies and mismanagement in the financial sector is responsible for the existing crisis, he said.
The government has not taken any appropriate measure to attract foreign direct investment and diversify export destinations, said Mansur, also a former official of the International Monetary Fund.
Besides, the financial sector is facing various problems, especially for want of corporate governance and proper monitoring on part of the financial regulators, he said.
“This has led to a large amount of defaulted loans in the banking sector in recent periods.”
Defaulted loans surged 24 percent to Tk 116,288 crore in September compared to that in December last year, Bangladesh Bank data showed.
Because of the presence of the high volume of defaulted loans, private sector credit growth dropped to a nine-year low of 10.04 percent in October as the majority of banks are unable to give out loans as expected.
Mansur said businesses are persistently showing reluctance to set up new units or expand existing ones because of a lack of confidence.
“The unwillingness has put an adverse impact on the economy, hitting both exports and imports and the overall balance of payments.”
