Businesses opened Letters of Credit worth $1.6 billion in April, a 268 percent drop from the same month this past year and 263 percent from March, according to Bangladesh Bank data.
The US in a recently available report said the world economy is projected to shrink by 3.2 percent in 2020 after the coronavirus pandemic sharply restricted monetary activity, increased uncertainty and sparked the worst recession because the depression.
The pandemic in addition has devastated Bangladesh’s economy with record drops in export and other sectors with the persons across the globe hunkering down to avoid infection. Remittance inflow in addition has dropped but remained greater than expected.
Asked about import, central bank officials said they cannot even remember when was the last time imports dropped to only $1.6 billion.
“The whole planet was on lockdown in April due to the COVID-19 pandemic. No-one opened LCs other than importers of drugs and some essential commodities ahead of the Ramadan,” its Executive Director Kazi Saidur Rahman said, terming the problem “distressing”.
Businesses didn't open LCs for other products, including raw materials of Bangladesh’s most significant exporting sector readymade garments, capital machinery, and intermediate goods, according to Saidur.
“Plummeting import means plummeting investment, that will cause a shrink in jobs,” researcher Ahsan H Mansur said.
“We have slipped into a grave crisis. It’s an ominous sign for investment,” he added.
Mansur said even though the pandemic ends, it could not change the problem suddenly as people will need time to regain their purchasing capacity.
“Demand and import won’t rise if people don’t have money,” he warned.
According to central bank data, LCs worth $1.95 billion were cleared in April. The total amount dropped by 62 percent year-on-year and 53 percent from March.