TRADE and business are still following a sluggish trend though there is a continuation of the incumbency by a voter-less election. The precarious nature of export and imports declined to a new low as the trade deficit stood at $6.80 billion in 2013-2014, the lowest in the last four financial years, due to a downward trend of imports in the period under report.
While a narrowing trade deficit is generally considered positive for the economy but in this instance it is not good for the economy as it resulted due to a decline in demand for capital goods and raw materials which are used for exports . In this context, it is expected that regime stability may usher the economy to a more ‘business-friendly’ climate.
A national English daily reported that businessmen are still following a cautious policy when importing the industrial raw materials and capital machinery as they think that political unrest will return soon. The gap between export earnings and import payments was $7 billion in FY13, $9.32 billion in the FY12, and $7.74 billion in the FY11 respectively. According to Bangladesh Bank statistics, imports registered an 8.92pc growth in FY14 against a negative growth of 0.80pc in FY13. The import payments stood at $36.57 billion in FY14 whereas it was $33.57 billion in FY13. The country’s export earnings increased by 12.04pc in FY14 compared with that of 10.74pc growth in FY13. The export earnings stood at $29.76 billion in FY14 while it was $26.56 billion in FY13. The export growth increased in FY14 due mainly to an increase in the readymade garment exports.
A central bank official claimed that political violence in the last year put an adverse impact on the country’s imports and it contributed to a decrease in the trade gap. One issue that has been the most disturbing point is the pervasive corruption in the government or its agents at various power points, which is acting to prevent normalcy in the business atmosphere. Economists and experts said that the imbalance in trade gap would not have much of a positive impact on the country’s macro-economic situation as the gap had not declined due to an export growth.
The business community is yet to regain their confidence to expand their business. As a consequence the import financing of the banks maintained a downward trend in the industrial sector. Imports declined in the last financial year which compelled the country to maintain increased reserves in recent months. In the process, the exchange rates of the dollar against the local currency declined in the period that put a negative impact on the export sector and on the inflow of remittances.
In order for the economy to flourish, industrial expansion is imperative which only can be groomed in a politically favourable scenario. As the unelected people run the government, the businessmen fear an eruption of mass political violence, which has in turn lowered their engagement in business. This is equally true of both the local and foreign business entities. A reversal can only be expected with the change of political climate of the country. Otherwise, this impasse in trade circles shall continue even in the distant future.
