Higher fuel oil import in Q1 ups trade deficit to $1.81b

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Siddique Islam The country's overall trade deficit widened by over 23 per cent to US$ 1.81 billion in the first quarter (Q1) of the current fiscal year (FY) following higher import of fuel oils, officials said Sunday. "Higher import of petroleum products is mainly responsible for widening of the trade deficit during the period under review," a senior official at the Bangladesh Bank (BB) told the FE. He also said the import of other essential items including industrial raw materials, intermediate goods and capital machinery also increased significantly during the period to meet the domestic demand. The overall trade deficit rose to $1.81 billion in July-September period of the FY 12 from $1.47 billion during the corresponding period in the previous fiscal, according to the central bank statistics. The BB official also said the rising trend in fuel oil import is likely to continue in the coming months to meet the growing demand for oil-based power plants across the country. The petroleum products' import increased by over 100 per cent to $1.19 billion during the period under review compared to $592.08 million in the corresponding period in the previous fiscal. "The overall trade deficit may ease slightly in the coming months largely because of a falling trend in import of food grains, including rice, under a seasonal impact," the central bank official said. During the period, export earnings stood at $6.20 billion against the import payments of $8.01 billion, the BB data showed. The central bank official also said food import declined during the period as the country has built a large stock of the main staple rice after a bumper Boro crop harvest in May this year. The BB figures show that import of food grains, such as rice and wheat, fell by 3.19 per cent to $341.07 million in the Q1 over the same period last fiscal. "It's a good sign for the economy," the central banker said, adding that the country's current account balance may improve in the coming months because of lower food grain import. The country's current account balance decreased by nearly 51 per cent to $307 million in the Q1 of FY12 from $622 million in the same period of the previous fiscal. However, the overall balance of payment (BoP) has recorded a deficit of $400 million during the period from the deficit of $426 million in the corresponding period in the previous fiscal. The overall BoP entered the negative territory in FY11 after a decade due to widening trade gap, lower growth of remittances and deficit balance in the financial account. Net foreign direct investment (FDI) in the country rose to $282 million in the Q1 of FY12 from $171 million in the same period in the previous fiscal, BB statistics shows.