Bangladesh's trade deficit rose by 80 per cent in the first eight months of the ongoing fiscal due to a surge in import payments against lower exports receipts. Between July last year and February this year, the trade deficit totalled $22.30 billion in contrast to $12.35 billion during the same period a year ago, according to data from the Bangladesh Bank.
The shortfall may surpass the previous peak of $23.77 billion, registered in the last fiscal, as import payments are expected to maintain the current momentum.
Imports stood at $54.37 billion in the first eight months of fiscal 2021-22, an increase of 46.7 per cent year on year. Exports grew by 30 per cent to $32.07 billion.
The widening of the trade gap has intensified pressures on the exchange rate of the taka against the US dollar, which will ultimately reduce the foreign exchange reserves as well, according to Bangladeshi media reports.
The country may have to increase its borrowing from foreign sources to a large extent as the ballooning trade deficit has already created a record deficit in the current account.
Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue, feels the trade deficit may hit $35 billion at the end of the fiscal if the ongoing trend continues.
Remittance has also remained lower than expected, sending the current account deficit to a record high of $12.83 billion during the July-February period in contrast to a surplus of $825 million a year ago. The previous widest deficit in the current account was $9.56 billion recorded in fiscal 2017-18. It was $4.57 billion in the last fiscal.
In February, the foreign exchange reserves stood at $45.94 billion, enough to cover import payments for 5.1 months.