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REJAUL KARIN BYRON and JAGARAN CHAKMA
Despite capital machinery imports decreasing sharply, the resurgence in Bangladesh’s overall imports continued for a third straight month in October due to increased production in industries, especially export-oriented sectors, signalling that there may be some light at the end of the tunnel.
The country’s imports had dropped sharply for the past two fiscal years, declining 10.61 percent in FY24 and 15.76 percent in FY23.
However, there are some indicators that the trend may be reversing. Overall imports increased by 2.04 percent during the first four months of the current fiscal year. In the same period last fiscal year, it registered a 20.64 percent decline.
In October this year, imports increased by 3.11 percent whereas they fell by 10.40 percent in the same month last year.
Bangladesh began to see a surge in import costs after demand surged following the lifting of restrictions imposed during the Covid-19 pandemic. The breakout of the Russia-Ukraine war only led to these costs to inflate further.
To combat this, the Bangladesh Bank adopted various import-control measures, which caused a further slowdown. These restrictions began to be slowly lifted by the interim government, which assumed power following a political changeover in early August.
On a positive note, investors and economists said imports had rebounded this fiscal year despite dropping due to nationwide unrest in July and August, when mass protests halted normal business operations.
Bangladesh’s Purchasing Managers’ Index (PMI), which provides a gauge of economic dynamism, indicated an accelerated economic expansion driven by the agriculture, manufacturing, and services sectors in the past two months after three months of contraction.
The PMI rose 6.5 percentage points to 62.2 in November from a month ago, according to the Metropolitan Chamber of Commerce and Industry (MCCI) and Policy Exchange Bangladesh (PEB), which jointly prepare the index.
Despite the positive outlook, the economy continues to face challenges from political uncertainty and disruptions due to protests, it said.
“The sharp decrease in capital machinery imports indicates that new investment plans are literally on hold,” said M Masrur Reaz, chairman and chief executive officer of the Policy Exchange of Bangladesh.
“It is a matter of grave concern. Employment opportunities will not grow as there will be no fresh investments,” he said, adding that industrial units were slowly returning to normal production.
According to central bank data on letter of credit (LC) settlements, the import of industrial raw materials increased by 9.04 percent during the first four months of FY25 after reducing by 35.72 percent during the corresponding period last fiscal.
This data matched export figures, which increased by 8.33 percent in the first four months of the year.
The increasing import of industrial raw materials means that industries are trying to squeeze the most out of their current capacity, Reaz said.
Anwar-ul Alam Chowdhury Parvez, president of the Bangladesh Chamber of Industries, said businessmen could not import raw materials last fiscal due to restrictions on opening letters of credit due amid a US dollar crunch.
However, this situation has been mitigated to some extent, which is why raw material imports increased slightly.
Still, he said there was no reason for optimism, labelling