Current account balance positive again after 3 years
In July, the first month of the current fiscal year, there was a surplus of $24 crore in the current balance
Bangladesh's current account balance has become positive again after three years.
In July, the first month of the current fiscal year (FY), there was a surplus of $24 crore in the current balance. During the same time last year, there was a deficit of $14.9 crore.
According to Bangladesh Bank, in FY 2015-16, there was a surplus of $426.20 crore. The following three years experienced a deficit in the current account.
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Indeed, in the first month of the current FY, the trade deficit decreased following a decrease in import growth, and an increase in export and remittance sent by expatriates.
The current account is now witnessing a surplus. In the last FY, the trade deficit decreased by 15 percent compared to that in the previous FY. In July of the last FY, there was a trade deficit of $116 crore, but that stood at $98 crore in July of this FY.
In FY 2016-17, the trade deficit increased to $1825 crore, which is a record in Bangladesh.
Dr Nazneen Ahmed, a senior research fellow at the Bangladesh Institute of Development Studies (BIDS), said, "The current account becomes positive when export earnings and remittance income are good. The trade deficit decreases for the same reason."
She further said that imports that were increasing before, are now decreasing. In the first month of any FY, the current account remains positive, and a decrease in trade deficit is a positive sign for any economy. Besides, the increase in foreign exchange reserves will help to lessen the pressure on banks.
According to the last report of Bangladesh Bank, import in this FY has increased compared to that in the previous year. Compared to import in July last FY, there has been a growth of 2.26 percent in July this FY, which is the slowest growth ever.
On the other hand, there is a growth of 8.11 percent in export. According to statistics from Bangladesh Bank, in July this year, there was an increase of almost $28 crore in remittance compared to that in July last FY.
The foreign exchange reserve has increased because of a decrease in the trade deficit and a surplus in the current account. At the end of July this year, the foreign exchange reserve stood at $3209.33 crore, up from $3099.43 crore in May.
