A significant increase in public and private investment is necessary to maintain competitiveness and generate further growth in Bangladesh.
Observations in the Quarterly Economic Review of the Metropolitan Chamber of Commerce and Industries (MCCI), released on Wednesday further said Bangladesh is now confronting some major challenges including slow implementation of development projects, low investment and sluggish growth of revenue in steering its economy to a higher growth trajectory The executive summary of the report mentions that the overall trade deficit narrowed by 46.90 per cent to US$2.04 billion in July-September of FY21 from US$3.84 billion in the corresponding period of the previous fiscal year. In these three months, exports increased slightly by 2.97 per cent while imports recorded a negative growth of 11.47 per cent.
Current account balance recorded a significant surplus of US$3.53 billion in July-September of FY21 as compared to the deficit of US$715 million in July-September of FY20. Surplus in current account balance emerged from larger inflows of remittances and significantly lower deficit both in trade and services accounts.
It said the domestic credit, on the other hand, grew by 12.65 per cent at the end of September 2020, while a slightly higher rate of growth of 14.42 per cent was recorded at the end of September 2019.
Among components of domestic credit, private sector credit registered 9.48 per cent growth during the period between September 2019 and September 2020, compared with a higher growth of 10.66 per cent during the period between September 2018 and September 2019.
Public sector credit, on the other hand, recorded a growth of 32.04 per cent at the end of September 2020, compared with a higher growth of 44.40 per cent at the end of September 2019.
To cope with the possible economic impact on the country due to the COVID-19, the government has taken 21 bail-out packages. Under one of these stimulus packages, CMSMEs get loans of Tk.200.0 billion as working capital. Until 30 September 2020, only Tk.48.23 billion or 24.12 per cent was disbursed. This package mainly helps the agro-processing industries, fisheries, poultry, and dairy farms.
The capital market passed yet another gloomy period under the quarter under review. Stocks extended the losing streak for the second consecutive session on 30 September 2020, the last working day of the quarter, as risk-averse investors continued their profit booking sell-offs on quick-gaining shares.
The overall export growth in July-September of FY21 was largely driven by the readymade garments sector, which alone fetched US$8.13 billion or 82.12 per cent of total exports.
The single-month export earnings in September 2020 (US$3.02 billion) increased month-on-month by 1.68 per cent from US$2.97 billion (August); also grew year-on-year by 3.53 per cent from US$2.92 billion. It surpassed the strategic target (US$2.85 billion) by 5.96 per cent.
The inflow of remittances in the quarter under review grew by 48.54 per cent to US$6.71 billion from US$4.52 billion in Q1 of FY20 despite the ongoing COVID-19 pandemic. The government incentive and the latest policy support provided by the BB have contributed to achieving the new record of inward remittances. While, in the last month of the quarter (September 2020), year-on-year, remittances registered a growth of 45.63 per cent. Also, the inflow of remittances in September increased by 9.14 per cent from the previous month (August 2020).
In the first three months of the current fiscal year, the net FDI decreased by 60.0 per cent to US$68 million from US$170 million in the corresponding three months of FY20, according to the BB’s balance of payments data.
On the other hand, the gross inflow of FDI during the period under review also decreased by 24.69 per cent to US$540 million from US$717 million in the corresponding three months of FY20. FDI inflow in Bangladesh is low compared to that in many countries at similar level of development.
Between end-June of 2020 and end-September of 2020, the value of Taka appreciated by 0.11 per cent in terms of the US dollar.
The general point to point inflation rate increased by 0.29 percentage points to 5.97 per cent in September 2020 from 5.68 per cent in the immediate past month (August 2020) mainly due to the coronavirus outbreak-induced price hike of essential food items. A year ago, in September 2019, the inflation rate was lower at 5.54 per cent.
Food price inflation increased by 0.42 percentage points to 6.50 per cent in September 2020 from 6.08 per cent in August due to the prices of some food items that soared in the month. Year-on-year, food inflation also rose significantly by 1.20 percentage points from 5.30 per cent.
Export earnings (merchandise) in the first quarter of the current financial year (July-September of FY21) increased by 2.58per cent to US$9.90 billion from US$9.65 billion in the corresponding quarter of the previous fiscal year (Table 7 and Figure).
Experts and exporters opined that gradual reopening of western markets and placing of new orders coupled with revival of majority of the previously suspended or cancelled ready-made garment (RMG) work-orders contributed to the turnaround.
According to the Economic Relations Division (ERD) provisional data, the disbursement of foreign aid increased by US$473.16 million or 50.29 per cent to US$1413.96 million in the first quarter of the current fiscal year (Q1 of FY21) compared to US$940.80 million in the corresponding period in the previous fiscal year. Out of US$1413.96 million, US$1385.38 million came as concessional loans while US$28.58 million came as grants.
