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Bangladesh: 13% Rise in FDI Inflows; But Trade Deficit Exceeds $9 billion

Bangladesh experienced an increase in foreign direct investment (FDI) in the first 11 months of its previous fiscal year (FY17), according to data released by Bangladesh Bank.

Gross FDI inflows for FY17 (July 2016 to May 2017) reached $2.65 billion, a 13.73% increase compared to the same period in FY16 (July 2015 to May 2016) where the figure was marked at $2.33 billion.

More impressively, net inflows (calculated by deducting disinvestment, loss and repayment of loans from the gross figure) surged by 27.75% in FY17, hitting a total of $1.62 billion which is a $0.35 billion gain from FY16’s $1.27 billion figure.

The stock market, alongside the energy and telecom sectors, were the main beneficiaries of FDI inflows over the period. Net portfolio investment in the stock market experienced a healthy boost between FY16 and FY17, jumping sixfold from $56 million to $324 million. The inflows have been reflected in the Dhaka Stock Exchange, which increased by 12.31% in the first half of 2017.

However, there was some negative news emanating from the Asian country after its trade deficit widen to $9.19 billion in FY17, an incredible 42.5% increase compared to the previous fiscal year FY16 where the deficit was recorded at $6.45 billion.

A major factor that pushed it over the $9 billion mark is the rate of increase in imports which completely outstrips the rate of increase exports, with the former growing by 10.68% ($36.37 billion to $40.253 billion) and the latter by 3.8% ($29.919 billion to $31.055 billion) between the two fiscal periods.

The deficit in the trade in services also widen between the two fiscal years from $2.4 billion to $3.1 billion, attributed to large increases in the import of services (15% rise from $5.5 billion to $6.4 billion) relative to exports of services (5% increase from $3.1 billion to $3.3 billion).

 

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About James Eugene (41 Articles)
Interested in many (maybe too many) things. Football, Politics and Emerging & Frontier Markets, to name a few. Twitter: @James_Eugene

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