The country's trade deficit rose by 7.28 percent – or $1.09 billion – year-on-year during July to May of the 2019-20 fiscal year as export earnings took a hit from Covid-19, according to the latest data of the Bangladesh Bank.
The Covid-19 pandemic has rocked both the Bangladeshi manufacturing sector and supply chains of export destinations.
After the end of general holidays in the country, the central bank updated the February, March, April, and May balance of payment data in the last 30 days.
Md Serajul Islam, spokesperson and an executive director of the Bangladesh Bank, told The Business Standard, "As banks did not remain fully operational during the government-declared general holidays, it became very difficult for us to prepare the balance of payment data."
Before the shutdown, the country's trade deficit in the first nine months of the current fiscal year fell by $123 million – or 1.01 percent – to $12.07 billion year-on-year.
The situation, however, changed during July to May of the 2019-20 fiscal year with the country's trade deficit widening to $16.07 billion against $14.98 billion in the same period of FY19.
The big drop in export earnings in May increased the deficit.
In May, Bangladesh's export earnings dropped by 61.57 percent to $1.46 billion from $3.81 billion in the same month of the previous year.
The Bangladesh Bank has not published import data separately yet. Imports also fell by 10.81 percent – or $5.60 billion – to $46.24 billion during July to May of FY20 from $51.84 billion in the same period of FY19.
The country's trade deficit may rise further in the coming months when all the export-oriented industries will resume operations in the post-pandemic period.
A turnaround in export earnings would largely depend on the resumption of full economic momentum in the country's major export destinations, experts said.
Even though many of the country's export destinations already started reopening after tackling Covid-19, the situation is still critical in other places, they said.
Unless Covid-19 is tackled efficiently and the situation returns to normal, the buyers will not be interested in sourcing products from Bangladesh, they maintained.
The current account deficit, however, fell by 15.13 percent to $4.37 billion in the first eleven months of the current fiscal year from $5.15 billion in the same period of FY19.
The inflow of remittances dropped by 14 percent year-on-year to $1.50 billion in May, registering a fall of $244 million from the same month a year ago. It was $1.74 billion in May last year.
The country's overall balance stood at a surplus of $1.63 billion during July to May of FY20, against a deficit of $682 million in the same period of the previous fiscal year.
The surplus overall balance will not be sustained if the trade deficit and current account deficit widen, experts warned.
During July to May of FY20, net foreign direct investment dropped by 19.04 percent to $1.96 billion from $2.42 billion in the same period of FY19.