Bangladesh's trade deficit has contracted slightly in the first eleven months of the current fiscal year due to a sharp decline in imports, primarily driven by government restrictions.
However, the deficit widened in May, according to the latest data from the Bangladesh Bank.
The trade deficit stood at $20.22 billion during July-May of FY2023-24, down from $26.20 billion in the same period of the previous fiscal year, representing a 22.82 per cent decrease.
Despite this overall improvement, the deficit ballooned by $1.52 billion in May alone.
Imports plummeted by 12.6 per cent to $57.56 billion in the first eleven months of the fiscal year, compared to $65.88 billion a year earlier. While this decline eased pressure on the trade balance, it also impacted domestic production and economic growth.
Exports also contracted by 5.9 per cent to $37.34 billion during the period under review, from $39.68 billion in the previous year. The combination of falling exports and imports resulted in a narrower overall transaction deficit of $5.8 billion, down from $8.8 billion a year earlier.
Remittances grew by 10.1 percent during the period, but the persistent trade deficit prevented the current account from moving into surplus.
Foreign direct investment (FDI) also declined by 6.5 per cent to $3.81 billion in the first eleven months of the fiscal year, compared to $4.07 billion in the previous year.
While the narrowing trade deficit offers some respite, the underlying factors – import restrictions and declining exports – pose challenges for the economy.