46
BBA Discussion Forum / Re: Business News
« on: July 22, 2011, 08:43:15 AM »Imports grow 35pc, pressure on BoP
Friday, July 22, 2011
Bangladesh's imports stood at nearly $32 billion in fiscal 2010-11, up 35 percent year-on-year.
Latest data showed imports grew in all major sectors from consumer items to intermediate goods, industrial raw materials, capital machinery and petroleum products.
Trade gap has widened to nearly $9 billion (for goods only) because of the much larger import base, creating a pressure on the declining balance of payments (BoP) that is now more than $500 million negative.
Bangladesh Bank (BB) data shows industrial raw materials, capital machinery and machinery for miscellaneous industries accounted for more than 54 percent of the country's imports for fiscal 2010-11.
Import of intermediate goods was nearly $2 billion or 7 percent of the total imports.
Import of petroleum and petroleum products, which is growing rapidly on additional demand to run rental power plants, constituted more than 10 percent of the total import values. Import of consumer goods was not far behind -- about $3.5 billion or 12 percent of the total imports.
Bangladesh's imports were $23.73 billion in 2009-10, up by only 5.47 percent from $22.50 billion a year ago.
Though analysts termed the trend in imports 'good' for the country's industrialisation, they said time has come to manage this high import growth, which they said 'not sustainable'.
“BoP is not in crisis, but 40 percent growth in imports is not sustainable,†said Sadiq Ahmed, vice chairman of Policy Research Institute and a former official of World Bank.
Bangladesh had record surpluses in the current account of the BoP in the past few years. The surplus was $2.4 billion in fiscal 2008-09 and $3.7 billion in fiscal 2009-10. Foreign exchange reserves increased from a low of $6.1 billion in June 2008 to $10.4 billion in June 2011.
The BoP situation changed dramatically in fiscal 2010-11. While exports of goods and services measured in nominal dollars grew even more rapidly than in the past, registering an expansion of 37 percent over the level in fiscal 2010, imports of goods and services increased at an unprecedented pace of 41 percent.
“As a result, the trade balance widened by 56 percent to $10 billion in 2010-11 from $6.4 billion a year ago,†said Ahmed, including the import of services. As compared to this, remittances grew modestly by 5.5 percent, he pointed out.
Besides managing high growth of imports, Ahmed suggested another option -- flow of foreign capital into the country -- to manage the situation prudently. “All the adjustments should not be on the exchange rate,†he added.
“There is nothing to be worried,†said Monzur Hossain, senior research fellow of Bangladesh Institute of Development Studies (BIDS).
Hossain suggested restriction on import of fancy items and facilitation of $1 billion credit to be provided by the International Monetary Fund as short term remedies to address the situation.
Dr Nazneen Ahmed, a senior research fellow of BIDS, said recovery of world economy and relatively cheaper credit provided in 2009 and 2010 have encouraged industrialists to go for expansion and accordingly, import of machinery and raw materials.
“Recovery of global financial crisis has increased the demand for our products,†said Nazneen Ahmed.
http://www.thedailystar.net/newDesign/news-details.php?nid=195167