Current account returns to surplus on July

13 Sep 2020 10:44 AM
Image collected
The country's current balance registered a surplus of around US$2.0 billion in July previous against a deterioration of over $100 million a year earlier.

This is mainly because of higher inflow from remittances, economists believe.

However they said such a surplus is due to poor household demand, especially intake and investments that led to a fall in import spending.

The import bill fell by almost $1.0 billion in July, 2020 when compared to same period a year earlier, according to Bangladesh Lender latest data.

The data also showed that remittance inflow reached $2.6 billion in July, up $1.6 billion through the same period a year earlier.

On the other hand, capital goods import fell to $866 million in the month. It had been $1.5 billion in July in 2019.

The import of intermediate goods also fell by $300 million to $2.5 billion in July over the same period a year back, the BB data stated.

However, exports earnings during the period remained almost the same level mainly because the same period a calendar year earlier.

However, overall Harmony of Payment (BoP) as well registered a surplus at $1.1 billion in July in 2020 against a minus $77 million in July 2019.

Travel repayment of the service profile, one of four parts of the BoP, fell simply by a lot more than one-fourths to $224 million in July last.

Health-related expenses on July, another element of the financial profile, was null as sufferers did not travel for treatment because of restricted flight functions. It had been $0.2 million in July in 2019.

Education-related payment fell to $17.5 million in the time under review, down by $8.0 million from a year earlier.

Expressing a mixed response on the point out of the current accounts surplus, Dr Ahsan H Mansur, executive director at the Policy Research Institute of Bangladesh (PRI) said Bangladesh requires a moderately negative this sort of balance.

"We've seen encounters of several developing economies, which often visit a moderate negative throughout their development stage, Bangladesh ought to be so."

He said an enormous decrease in the import costs has been the key driver at the rear of the surplus.

He as well said this surplus was first also driven by a record inflow of remittance.

He, on the other hand, said such huge surplus will help build-up the reserve.

"The economy will get back to the amount of pre-COVID-19 level within the next 8/9 weeks," he said

"To my mind, Bangladesh is picking right up but it will take period at least June up coming," he added.

On the other hand, Dr Zahid Hussain told the FE that the existing account surplus is a bit of good news in a sense that it has helped boost the foreign exchange reserve.

But it has embedded bad media also, "It also means there is absolutely no consumption and expenditure demand throughout the market."

Even so, Bangladesh's agricultural shipment authorized a higher value worth $111 million through the period, up by 27 million from July 2019.