Current account deficit shrinks despite pandemic
The country’s current account deficit narrowed by 3.05 percent to $4.84 billion in fiscal year 2019-20
Despite a massive fall in export earnings during the Covid-19 pandemic, the country's current account balance painted a rosy picture in the last fiscal year, thanks to a strong remittance inflow and a slowdown in import spending.
The current account deficit narrowed by 3.05 percent to $4.84 billion in fiscal year 2019-20 – from that in the previous fiscal year, according to the Bangladesh Bank data.
The current account deficit is a measurement of a country's trade where the value of the goods and services it imports exceeds the value of the products it exports.
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Although the current account balance did not feel the pinch of falling export earnings, the trade deficit widened during the period.
According to the Bangladesh Bank data, at the end of June, the country faced a $17.86-billion deficit in the international trade due to a drop in exports.
The trade deficit is 12.79 percent wider than that in June last year. In fiscal year 2018-19, the country's trade deficit was $15.83 billion.
Analysing the data, it has been found that, in fiscal year 2019-20, the country's export earnings fell by 17.10 percent to $32.83 billion, and in the last three months, the exports plunged drastically due to lockdowns worldwide to curb the spread of novel coronavirus.
On the other hand, imports fell by 8.56 percent to $50.69 billion in the same period.
Amid this dismal situation, remittance and reserve have a very swift increasing trend, though experts say the remittance is the savings of expats as they will have to pack their bags soon.
Last fiscal year, the country received $18.20 billion in remittance, 10.87 percent higher than the figure in the previous fiscal year. At the end of June this year, the gross foreign currency reserve rose to near $36 billion.
However, the country's overall balance of foreign transaction has a surplus of $3.65 billion at the end of fiscal year 2019-20.
During the fiscal year, the net foreign direct investment dropped by 31 percent to $1.80 billion.
