Current account deficit narrows

A significant fall in the import expenditure has reduced pressure on current account balance and created breathing space for the Bangladesh Bank in managing macroeconomic stability.

The current account deficit narrowed to $1.09 billion in July-November of FY20 from $2.42 billion in the same period of the last year.

Trade deficit slightly increased in the July-November period of the current fiscal year thanks to significant improvement of the current account balance.

In the first five months of FY20, the total trade deficit stood at $6.68 billion, according to the central bank's data.

Industry experts said strong growth of remittance kept macroeconomy stable while falling export remained a concern for the banking industry.

Remittance also grew by 25.34 percent in the first six months of FY20.

Foreign exchange reserve, which remained below $32 billion for long, crossed the figure in December last year.

On the other hand, export and import fell as banks were reluctant in lending amid pressures of implementing single digit interest rates.

The government vowed to implement a single digit interest rate from April this year.

The government move intends to facilitate industrialisation by reducing cost, it has yielded precisely opposite results as banks turned their lending focus to unproductive sectors from manufacturing sector, officials said.

The private sector credit growth dropped to single digit of 9.87 percent in November last year, continuing the recent falling trend.

But there is no shortage of money supply in the banking system and the lending rates of most banks are lower than those at any time in the past.

Slow export-import businesses and banks' cautious lending amid the pressure of implementing a single-digit interest rate are causing a slump in the private sector credit growth.

In the first five months of FY20, import growth fell by 5.26 percent when export growth dipped by 7.51 percent, central bank data shows.