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“Volatility in the foreign exchange market will ease too.”

However, import tightening measures alone will not be enough, he said, adding that the government also needs to cut its development expenditure.

“Besides, some relaxation is necessary regarding the interest rate,” he said, referring to the cap on loans and deposits maintained by the central bank since April 2020.

Raihan, also the executive director of the South Asian Network on Economic Modeling, said the short-term shock stemming from the widening of the current account deficit may not affect the macroeconomic stability in the long term.

“But it has created stress.”

And for the longer term, he said, the government should try to attract more foreign direct investment and go for reforms in the financial sector, taxation and subsidies to strengthen the country’s structural resilience to absorb short-term strains.

“We are frequently facing short-term shocks and these are unpredictable. We have to take steps to increase the resilience of the economy. It is high time to go for the structural reform.”