Trade imbalance shrinks in Q1

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FHM Humayan Kabir
Bangladesh's trade imbalance has contracted by US$650 million in the first quarter of the current fiscal compared to the corresponding period last fiscal, thanks to lower prices of goods because of the global economic meltdown, officials said Wednesday.
The trade gap between the incomes from import and export is accounts for $890 million in current FY2010 against that of $1.55 billion in the previous FY2009, official data showed.
During July-September period this fiscal, total shipment of Bangladeshi products was worth $3.87 billion while the country imported foreign goods worth $4.77 billion.
In the corresponding period of previous FY09, the export earnings were $4.38 billion against the import payments of $5.93 billion, the government statistics said.
Economic researchers and the central bank officials said the trade deficit has narrowed, as the volume of import by the country and prices of goods in the international market have fallen due to the impact of the global economic meltdown.
They said the trade gap could be thinner if the country's export maintained growth in the first quarter (July-September) of this fiscal like previous periods.
The export earnings have contracted by 11.66 per cent in the first quarter of this fiscal as the global financial plunge has walloped the shipments.
Economic researcher Zaid Bakth said: "In a sense, lower import payment is good for the economy. But if the spending for capital machinery and industrial raw materials drops it will be bad news for the economy."
The latest World Bank economic update released last month identified a number of reasons for the fall in import payments. One of them is the drop in commodity prices in the world market and the
another is decline in the quantity of some imported goods.
"Import payments and demand declined in FY2009, reflecting falling commodity prices," the WB report said.
I think the trade imbalance could be narrowed further if the government could create a better atmosphere for investment augmenting public spending for infrastructure and energy development, and ensure social security, Mr. Bakth told the FE.
"Demand for Bangladeshi products both in the domestic and foreign markets needs to increase to boost the country's economic growth. For this, more investment will have to be attracted," he said.