Bangladesh's trade deficit to widen: EIU
Monday, 22 October 2007
Bangladesh's trade deficit is set to widen from an estimated US$3.7 billion in 2007 to $4.0 billion in 2008 and $4.4billion in 2009, reports UNB.
"This is largely attributable to a growing import bill for oil, as volumes remain large and international prices high," said London-based Economist Intelligence Unit (EIU) in an outlook for the country's external sector released recently.
It said imports are forecast to continue to grow both in terms of volume and value in 2008 as demand for capital goods and some industrial raw materials remains strong. The absolute value of imports would continue to exceed that of exports by a wide margin throughout the forecast period.
Nevertheless, the report said, merchandise export growth would be helped by a gradual decline in the value of the taka against the US dollar. Owing to record inflows of workers' remittances, the current account would post surpluses in 2008 and in 2009.
The overall balance of payments (BoP) continued to maintain a healthy trend in fiscal 2006/07 (July-June). The current-account balance recorded a surplus of $952m on the back of record inflows of workers' remittances, which rose by 24.5 per cent year on year to $6.0 billion.
Higher imports, the value of which has been inflated by rising international prices for oil and non-oil commodities, pushed the trade deficit to $3.5billion in 2006/07, compared with $2.9billion in the previous fiscal year.
The report observed that the garment exports, the backbone of the export sector, slowed down dramatically in the second half of 2006/07 amid continued political uncertainty and erosion in business confidence as a result of the anti-corruption campaign.
Garment exports grew by 28 per cent year on year in the fist half of the fiscal year.
However, it said, the latest data show that the pace of growth had decelerated dramatically to 17 per cent for the first 11 months of the year. This compared with average annual growth rates of 27.3 per cent in the past two fiscal years.
"The industry missed out $1.5billion of export sales in the first six months of 2007 as orders were shifted to other countries," BGMEA president Anwar-Ul-Alam Chowdhury was quoted to have told the EIU.
He also noted that orders fell by 22-25 per cent year on year in 2006/07 as buyers moved orders to China, Vietnam and Cambodia, Bangladesh's main competitors.
The Asian Development Bank, in its latest assessment of the Bangladeshi economy, noted that better infrastructure and improved governance would lead to an increase in investment in the future.
"But these factors are unlikely to help much unless political stability returns to the country," EIU said.
"This is largely attributable to a growing import bill for oil, as volumes remain large and international prices high," said London-based Economist Intelligence Unit (EIU) in an outlook for the country's external sector released recently.
It said imports are forecast to continue to grow both in terms of volume and value in 2008 as demand for capital goods and some industrial raw materials remains strong. The absolute value of imports would continue to exceed that of exports by a wide margin throughout the forecast period.
Nevertheless, the report said, merchandise export growth would be helped by a gradual decline in the value of the taka against the US dollar. Owing to record inflows of workers' remittances, the current account would post surpluses in 2008 and in 2009.
The overall balance of payments (BoP) continued to maintain a healthy trend in fiscal 2006/07 (July-June). The current-account balance recorded a surplus of $952m on the back of record inflows of workers' remittances, which rose by 24.5 per cent year on year to $6.0 billion.
Higher imports, the value of which has been inflated by rising international prices for oil and non-oil commodities, pushed the trade deficit to $3.5billion in 2006/07, compared with $2.9billion in the previous fiscal year.
The report observed that the garment exports, the backbone of the export sector, slowed down dramatically in the second half of 2006/07 amid continued political uncertainty and erosion in business confidence as a result of the anti-corruption campaign.
Garment exports grew by 28 per cent year on year in the fist half of the fiscal year.
However, it said, the latest data show that the pace of growth had decelerated dramatically to 17 per cent for the first 11 months of the year. This compared with average annual growth rates of 27.3 per cent in the past two fiscal years.
"The industry missed out $1.5billion of export sales in the first six months of 2007 as orders were shifted to other countries," BGMEA president Anwar-Ul-Alam Chowdhury was quoted to have told the EIU.
He also noted that orders fell by 22-25 per cent year on year in 2006/07 as buyers moved orders to China, Vietnam and Cambodia, Bangladesh's main competitors.
The Asian Development Bank, in its latest assessment of the Bangladeshi economy, noted that better infrastructure and improved governance would lead to an increase in investment in the future.
"But these factors are unlikely to help much unless political stability returns to the country," EIU said.