Machinery import orders plunge due to recession
Monday, 30 March 2009
Siddique Islam
Import orders for capital machinery have plummeted by 30 per cent in the first eight months of the financial year, signalling a clear slowdown in industrial activities in the coming months, officials said Sunday.
Letter of credits worth US$786.03 million have been opened to import capital machinery during July-February as against $1.116 billion in the corresponding period last fiscal, the central bank said.
"Global economic recession has created an atmosphere of uncertainty in the country's industrial production." Chief Economist of Bangladesh Bank (BB) Mustafa K Mujeri told the FE Sunday.
"Companies have adopted a go-slow policy due to sluggish demand at home and abroad. As a result, they are placing fewer orders to import new capital machinery," he said, explaining the reasons for the drastic fall.
BB officials said the large-scale decline bodes ill for industrial growth in the upcoming months, as lack of new machinery may force some companies to cut back on production.
Actual import of capital machinery, however, has increased by nearly 5.0 per cent to $971.95 million during the same period, up from $928.89 million in the corresponding period last fiscal, the BB's data showed.
BB officials said the tiny growth was due mainly to the orders placed in the first few months of the fiscal year. "In the last three months, import orders for capital machinery were falling steeply," an official said.
The BB statistics were revealed as Finance Minister AMA Muhith admitted that Bangladesh has been hit by the global economic recession and the government was considering subsidies for the hard-hit industries.
A private banker said the government's subsidies are essential to keep the existing industrial plant afloat, but the overall situation would not improve until the economic recoveries in the West -- Bangladesh's main export destinations.
"The government supportive-measure looks OK. But it has to disburse the subsidies quickly. We don't see major new plants coming up till the global economy improves," the official who heads the bank's credit division said.
"Most of the entrepreneurs we know have either put their investment plans on halt or suspended them altogether," he added.
The country's overall imports, however, maintained hefty pace growing by 17.09 per cent during the period despite a significant drop in food grains imports, the BB said.
The country imported goods and machinery worth $14.792 billion in the first eight months of the fiscal, compared to $12.633 billion during the same period of the previous fiscal.
Import of food grains and other consumer goods were down by 41.05 per cent and 7.15 per cent respectively, with food-grains import falling to $603.14 million from $1.023 billion thanks to bumper crops in the outgoing year.
Another BB official said after a robust growth imports have been declining gradually as prices of commodities including oil have plunged in the international market.
Import growth was 22.44 per cent in the first six months of current fiscal.
Import of intermediate goods like coal, hard coke, clinker and scrap vessels sharply rose by 65.13 per cent to $1.451 billion, reflecting a recovery in the country's construction industry.
Industrial raw material import rose 24.69 per cent to $6.057 billion during the period, owing largely to increased export orders for ready-made garment sectors.
Import orders for capital machinery have plummeted by 30 per cent in the first eight months of the financial year, signalling a clear slowdown in industrial activities in the coming months, officials said Sunday.
Letter of credits worth US$786.03 million have been opened to import capital machinery during July-February as against $1.116 billion in the corresponding period last fiscal, the central bank said.
"Global economic recession has created an atmosphere of uncertainty in the country's industrial production." Chief Economist of Bangladesh Bank (BB) Mustafa K Mujeri told the FE Sunday.
"Companies have adopted a go-slow policy due to sluggish demand at home and abroad. As a result, they are placing fewer orders to import new capital machinery," he said, explaining the reasons for the drastic fall.
BB officials said the large-scale decline bodes ill for industrial growth in the upcoming months, as lack of new machinery may force some companies to cut back on production.
Actual import of capital machinery, however, has increased by nearly 5.0 per cent to $971.95 million during the same period, up from $928.89 million in the corresponding period last fiscal, the BB's data showed.
BB officials said the tiny growth was due mainly to the orders placed in the first few months of the fiscal year. "In the last three months, import orders for capital machinery were falling steeply," an official said.
The BB statistics were revealed as Finance Minister AMA Muhith admitted that Bangladesh has been hit by the global economic recession and the government was considering subsidies for the hard-hit industries.
A private banker said the government's subsidies are essential to keep the existing industrial plant afloat, but the overall situation would not improve until the economic recoveries in the West -- Bangladesh's main export destinations.
"The government supportive-measure looks OK. But it has to disburse the subsidies quickly. We don't see major new plants coming up till the global economy improves," the official who heads the bank's credit division said.
"Most of the entrepreneurs we know have either put their investment plans on halt or suspended them altogether," he added.
The country's overall imports, however, maintained hefty pace growing by 17.09 per cent during the period despite a significant drop in food grains imports, the BB said.
The country imported goods and machinery worth $14.792 billion in the first eight months of the fiscal, compared to $12.633 billion during the same period of the previous fiscal.
Import of food grains and other consumer goods were down by 41.05 per cent and 7.15 per cent respectively, with food-grains import falling to $603.14 million from $1.023 billion thanks to bumper crops in the outgoing year.
Another BB official said after a robust growth imports have been declining gradually as prices of commodities including oil have plunged in the international market.
Import growth was 22.44 per cent in the first six months of current fiscal.
Import of intermediate goods like coal, hard coke, clinker and scrap vessels sharply rose by 65.13 per cent to $1.451 billion, reflecting a recovery in the country's construction industry.
Industrial raw material import rose 24.69 per cent to $6.057 billion during the period, owing largely to increased export orders for ready-made garment sectors.