Current account deficit widening

Current account deficit widened further in the first six months of the fiscal year on the back of the sliding remittance inflow and slow export growth.

Between the months of July and December of 2016, the current account deficit stood at $793m in contrast to $1,852m in the surplus a year earlier, according to the central bank's balance of payments data.

The current account balance set foot into the negative territory for the first time in four years in the first quarter of fiscal 2016-17: the deficit was $504m and every month it has been gradually increasing.

The last time the current account was in the deficit -- of $447m -- was way back in fiscal 2011-12. Since then there had been no deficit in the current account balance at any point in time.

A major source of foreign currency for the country in the last 10 to 12 years has been remittance sent by expatriate Bangladeshis, which also keeps the external balance sheet in a strong position. In the first six months of the fiscal year, remittance dropped 17.65pc -- a development that has created a pressure on the current account balance.

Strong import growth coupled with a moderate rise in export and a slowdown in remittance inflow contributed to the deficit, said the Bangladesh Bank's latest monetary policy statement (MPS), which was unveiled last month.

In the first six months of fiscal 2016-17, imports rose 8.91pc while exports grew 4.33pc, both of which resulted in the further widening of trade deficit.