Trade imbalance alarming amid import surge, export squeeze

Bangladesh continues to see its trade gap widen as imports far outstrip export receipts as per latest official data that show dismal imbalances on April count.
The April deficit in monthly turnover of trade in goods and services was as large as more than 140 per cent or US$3.6 billion compared to the preceding month of March, according to the statistics released by Bangladesh Bureau of Statistics or BBS.
The export receipts dropped by nearly 22 per cent to $4.0 billion in the month under review. Conversely, the import costs increased nearly 15 per cent to $7.6 billion, the data show, upsetting the balance of trade.
On Saturday, Dr. Ahsan H. Mansur, executive director at the Policy Research Institute of Bangladesh or PRI, sees the trade situation as concerning as a $3.5-billion gap is huge for the Bangladesh economy right now.
Consequently, he told the Financial Express (FE) on Saturday, this will help raise the current-account deficit. "Financing the gap under the present circumstance is tough."
He notes that the data demonstrate the case for the Bangladesh government to refresh its export strategy to prioritise export-led growth.

The widening gap was caused by mainly higher imports on the occasion of Eid-ul Fitr and weak export receipts, he notes.
Exports are also likely to continue to struggle as external demand from key trading partners remained subdued in recent months.
Meanwhile, July-May export growth was just over 2.0 per cent while the May export receipts recorded more than 16 -percent negative growth over its previous period a year earlier.
Dr Mansur hints that the trade deficit may reach enormous proportions over the coming months.
Dr M. Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh, mentions that the central bank had eased import in April that led to the widening of the gap.
He notes that there was a current-account surplus worth $5.8 billion during the July-March period. During the Eid-ul-Fitr, the demand for both finished and raw materials usually remained high and the government had supposed that import may be relaxed as the current account was in surplus.
Dr Masrur also echos the view that such a high gap may be considered "alarming" for the economy as Bangladesh has been passing through a very tough time in terms of foreign-exchange market.
In the meantime, Bangladesh is taking support from the IMF to stabilise its volatile forex market and  macroeconomic challenges.
The IMF has said Bangladesh's economy continues to face multiple challenges. "Stubbornly high international commodity prices and continued global financial tightening have amplified macroeconomic vulnerabilities."
In response to these pressures, the authorities have recently undertaken bold exchange-rate reforms, the IMF said in its statement released on June 24 in course of appraisal of the country's creditworthiness ahead of release of each tranche of its $4.7-billion lending package.
The Executive Board of the International Monetary Fund (IMF) completed the second review under the Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility (RSF) arrangements for Bangladesh, allowing the authorities to withdraw the equivalent of SDR704.70 million (about US$928 million) under the ECF/EFF, and SDR166.68 million (about US$220 million) under the RSF.
This brings total disbursements under the ECF/EFF so far to SDR1,409.40 million (about US$1,856 million) and under the RSF to SDR333.35 million (about US$439 million).
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