Monday, June 20, 2011

Bangladesh trade deficit balloons

BANGLADESH'S TRADE deficit swelled by 42.60% year-on-year to $6.43 billion during July to April of the 2010-11 fiscal year due largely to steep rises in global food and fuel prices, an official told the Xinhua news agency Sunday.

The Bangladesh Bank official said the country exported $18.315 billion U.S. dollars of goods while it imported items worth $24.745 billion in 10 months of the current 2010-11 fiscal year, which ends this month.

The overall trade deficit in the same period of the previous 2009-10 fiscal year was nearly $4.509 billion when Bangladesh's export earnings and import payments stood at $12.977 billion and $17.486 billion, respectively, he said quoting Bangladesh Bank data.

In the first 10 months of the current fiscal year, the BB data showed that Bangladesh's export and import earnings surged 41.13% and 41.51% respectively compared to the same period a year earlier.

"Trade deficit keeps widening as prices of oil and food products had a considerable hike in the global market since recession started to recede," the BB official said.

Bangladesh's trade deficit in the last 2009-10 fiscal year ballooned nearly 10% year on year to over $5 billion as the country's imports rebounded since April after months of slump in the wake of the global economic recession, he said.

The official said the huge trade gap had a tremendous pressure on the balance of payment, but comfortable receipts of remittances from over 7 million nonresident Bangladeshis, living and working in over 100 countries, helped the central bank cushion its impact.

Remittances in July-April period of the current fiscal year 2010-11 totaled $9,587.16 million, around 4.30% higher than the same period a year ago, the BB data showed.

"As remittances offset rising trade deficit, its not a big problem for us," the official said, adding that containing inflation largely related to food items particularly staple rice is rather always a matter of big challenge for Bangladesh.
Price increases in food items, particularly the staple rice, is a key concern for the South Asian country's government as nearly 40% of its over 150 million people live on less than two U.S. dollars a day and spend 70%t of their income on food.

According to latest Bangladesh Bureau of Statistics released data, the country's inflation rate leaped to 10.67% in April, the highest since July 2008. In April food inflation grew at 14.36%, hitting a record on a point- to-point basis in the last three years, the BBS data showed.

First published by MarketWatch, June 19, 2011