The country posted a much lower current-account surplus until last May, over the corresponding period of previous fiscal year, due mainly to fall in the inflow of remittances and a surge in imports of food items and capital goods.
According to Bangladesh Bank (BB) latest statistics released Wednesday, between July and May last, the current-account surplus dropped more than 34 per cent year-on-year basis to US$1.54 billion.
Economic analysts said significant growth in net cash transfers in service sectors also contributed to the sharp fall in the surplus.
They warned that there could be further erosion in the current account balance in next months if the current trend in remittance inflow and export earning persisted.
"The sharp fall in the current account was primarily on account of widening of the gap in external trade in view of the surge in import and slower export growth," said Dr Zahid Hussain, lead economist at the Dhaka office of the World Bank (WB).
Import bill rose to $33.185 billion while exports increased to $27.0 billion during the July-May period, leading to the widening of the trade gap to $6.19 billion.
In view of the situation, Dr Hussain said: "There is a need for quick and strong recovery as far as the remittance earning is concerned."
The WB economist noted that sustainability in the capital-account surplus will be a major challenge unless there is quick recovery in the remittance inflow.
Inward remittances suffered negative growth for the first time in 13 years thanks to a shrinking outflow of migrant workers and falling receipts from Middle-Eastern countries-the main manpower market for Bangladesh.
Bangladesh received $14.23 billion in remittance in 2013-14, down 1.6 per cent from a year ago, according to the central bank.
Dr Hussain pointed out that there were significant funds debited during the period under review.
According to BB statistics, the growth in the outbound funds was 21.55 per cent during the period.
Dr Zaid Bakht, director (research) at Bangladesh Institute of Development Studies (BIDS), observed that the picking up of imports was a good sign for the economy. But he described the fall in remittances as a piece bad news.
"The government should take appropriate measure to boost the remittance inflow on sustained basis otherwise it will impact the economy," Dr Bakht said.
About the significant amount of outbound transfers in service sectors, Dr Bakht said Bangladesh did not grow to provide the services to the trade and for this reason a significant volume of money is going out each year.
He said payments for shipping freights and insurances are eating up a major portion of the service-sector proceeds.
Service-sector debit grew 21.55 per cent to $6.5 billion during the July-May time against $5.4 billion in the same period a year before.
Current account consists of the balance of trade, net factor income (earnings on foreign investments minus payments made to foreign investors) and net cash transfers.
A current-account surplus increases a country's net foreign assets by the corresponding amount, and a current-account deficit does the reverse to tip the balance.
