Current balance-of-payments (BoP) data show signs of Bangladesh's economy picking up with export receipts rising, imports returning to positive growth and a strong rebound in remittances.
This has led to a narrower current-account deficit, while both the financial and capital accounts have gained posted surpluses.
The latest BoP data, covering the first quarter (July-September 2024) of the current fiscal, reveal a current-account deficit of US$127 million, significantly lower than the $1.829-billion deficit in the same period last year, according to Bangladesh Bank's data released Wednesday.
The financial account posted a surplus of $560 million in this period, recovering from a deficit of $1.23 billion a year before.
Also in lockstep with the uptick in major parameters, the capital account showed an improvement with a surplus of $156 million, up from $42 million in July-September 2023.
However, there are considerable concerns regarding the BoP data due to a large amount categorized under "Errors and Omissions," exceeding $2.0 billion during the period under review.
Some leading economists suggest that this discrepancy could indicate unaccounted-for capital outflows from the country.
Dr Zahid Hussain, a former lead economist at the World Bank Dhaka office, raises such scepticism over these accounting figures. "The concern is the size of unaccounted outflows in Errors and Omissions. It has crossed $2.0 billion, with no satisfactory explanation other than capital flight."
The economist wonders how capital flight is happening under the current conditions, indicating the changeover. Dr Hussain thinks the surplus in the financial account has grown due to reduced outflows related to trade credit and short-term loans.
He notes that the BoP data reflect signs of economic recovery:
"Export growth has increased, import growth has turned positive after a long time, and remittance growth has been the strongest, helping to keep the current- account deficit low compared to the same period last year."
During the review period, export receipts grew 5.1 per cent to $10.56 billion, while import costs rose to nearly $15.19 billion or expanded nearly 1.0 per cent year on year.
Another economist, Dr M. Masrur Reaz, Chairman of Policy Exchange of Bangladesh, shared an optimistic view, pointing out that the rise in exports, imports, and remittances comes despite political disruptions in July and early August, which led to the toppling of the Awami League-led regime after nearly 16 years in power.
He notes that the BoP outlook might further improve following the victory of the Republican presidential candidate, Donald Trump, in the United States.
According to Dr Masrur, Trump's anticipated anti-China policies could open new opportunities for Bangladesh to expand exports to the US and other American economies.
"Many Chinese factories might relocate to avoid potential restrictions from the Trump administration, which could increase foreign direct investment (FDI) from China and boost Bangladesh's exports," he explains the possible blessing in disguise from the Trump triumph in US polls just on the day.
However, Mr Masrur cautions that there are risks associated with these developments, as future policies from the Trump administration could create volatility in the global economy, which may impact Bangladesh, too.
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