Q1 trade deficit shrinks by 32pc over export growth

The overall trade deficit of the country narrowed by more than 32 per cent in the first quarter of the current fiscal year (FY) due mainly to higher growth in export earnings, officials said Tuesday.

The overall trade deficit came down to US$ 1.27 billion in the July-September period of the FY 2013-14 from $ 1.87 billion in the corresponding period of last fiscal, according to the central bank statistics.

"The overall trade deficit may narrow further in the coming months, if the trend of growth in export earnings continues," a senior official of the Bangladesh Bank (BB) told the FE.

He also said the overall import payments increased, but not up to the expected level, during the period under review because of the ongoing political turmoil centring on the next general election.

The country's overall export earnings including those from export processing zones (EPZs) rose to $ 7.54 billion in the Q1 of the current FY from $ 6.17 billion in the corresponding period of the previous fiscal while import payments reached $ 8.80 billion from $ 8.05 billion, the BB data showed.

The central banker also said the country's overall imports might fall in the coming months if the political turmoil continued.

He also said the decreasing trade deficit helped achieve a healthy current account balance during the period under review. The country's current account balance rose to $ 786 million in the first three months of the FY 14 from $ 331 million in the corresponding period of the previous fiscal.

However, the overall balance of payment (BoP) came down to $ 910 million during the period under review from $ 1.11 billion in the corresponding period of the FY 13.

"The overall BoP may increase in the coming months because of the healthy position of the country's foreign exchange reserve," the central banker explained.

The foreign currency reserve now stands at $16.66 billion after a routine payment of $ 890 million made to the Asian Clearing Union (ACU) last week against imports during the period of September-October last.

"We're able to settle more than five months' import bills with the existing forex reserve," another BB official said, adding that the reserve would increase gradually in the coming days.