Import down by around 10% in Jul-Dec FY21

The trend in import continues to decline in line with the fall of demand as well as production due to the impact of Covid-19 pandemic.

In the first six months (July-December) of the current fiscal year, imports declined by 9.7% compared to the same period a year ago, according to a Bangladesh Bank analysis of the data on the opening and settlement of letters of credit (LCs).

The data shows that the number of LCs opened is much less than those settled.

In the July-December period of the current financial year, LC openings decreased by 1.42% to around $397 million compared to the same period of the previous fiscal.

On the other hand, the settlement of LCs has also decreased by $2.57 billion.

LC settlement is usually considered to be the import payment. 

Asked about this, the Centre for Policy Dialogue (CPD) Research Director Khandaker Golam Moazzem said it is difficult to make business decisions in times of uncertainty.

Many businessmen increase import considering that the demand will be higher, but as the situation has changed, the number of LCs opened is yet to be settled, he said.

Despite the declining trend in imports, the cargo handling capacity at the country's premier port is on the rise, according to the recent Monetary Policy Review report published by the central bank.

According to the report, the cargo handling in the import sector had been severely hit from March to May last year due to Covid.

However, from May, imports started to turn around again. In that month, imports were 4 million metric tons which increased to more than 8 million metric tons in November.

Moazzem said this could be that imports decreased but cargo handling increased, and even if the volume of imported goods increases, the value of those goods could be lower than what was earlier.

Citing an example, he said now the import of capital equipment for setting up industries has come down. 

"All those equipment are less in quantity but more in value. On the other hand, the goods being unloaded at the port now may be imported against the previously opened LCs," said the CPD official.

As per the central bank report, the domestic demand will continue to grow as remittance inflow was high amid the pandemic.

The report mentioned that as the private sector is turning around, imports will increase in the coming days and the economy will turn around amid the second wave of Covid. 

The situation is still uncertain in the midst of the second wave of Covid, Moazzem said, adding that the government needs to play a more proactive role in increasing the domestic demand.