Bangladesh Economic Update, September 2014
The current issue of Bangladesh Economic Update attempts to understand the current status of external sector against the backdrop of existence of negative balance in service for a long time, decrease in remittance with fall in number of expatriates, large trade deficit and unsatisfactory inflow of Foreign Direct Investment (FDI) and the foreign aid in the country. Overall external balance is showing positive balance because of inflow of one or two items in a huge amount, but decrease in remittance and export of manpower, increasing deficit in service and trade balance impede the growth rate of the economy. Inflows of remittance became negative in the last Fiscal year (FY) for the first time within ten years mainly because of the decline in labour migration to major markets like Saudi Arabia, UAE and Malayasia. This declinig inflow of remitance is likely to exert adverse impact on rural economy since consumption and expenditure of people living in rural areas are largely contingent upon remittance sent by their household members living aborad. Increase in Import payments and export earnings cause decrease in trade deficit, because earnings from export grow more than that of import payment. Investment stagnation and the recent political contestations in the country, however may create an uncertain business environment as regards setting up new industries which will result in decreased investment demand-induced import of capital machinery and thus will further affect the trade balance.