In the fiscal year 1994/95 (July-June) exports reached $3.27bn, up a spectacular 33% on 1993/94. Exports of garments once again put in a good performance, growing by 32% in 1994/95 to reach $1.85bn, while jute goods rose by 43% to $340m. High rates of growth were also recorded by fish and prawns (up by 31% to $329m), hides and skins (up 39% to $218m), and fertiliser (up 75% to $77m). The only disappointing performance was that of tea, earnings from which were down by 26% at $32m.
Although garments thus continued to account over half of export receipts (57%), in terms of domestic value added they are of much less significance. Between 70% and 75% of the value of garments exports represents imported fabric, yarn, packing materials and other essentials, and barely 10% of the fabric required by the clothing industry is domestically produced.
--but were outpaced by growth in imports--
The excellent performance by exports was eclipsed by even stronger growth of imports, which rose after two years of stagnation when their value hovered around the $4bn mark. Imports rose by 39% to reach $5.84bn in 1994/95. Spending on textiles rose by 31%, in line with the growth in garments exports, to $1.3bn, machinery and transport equipment was up by 71% as firms expanded their output, and imports of fuels and chemicals rose by 24% and 50% respectively. However, by far the largest increase was registered in food imports which reached $476m (including the value of food aid) as shortages developed in response to the disappointing harvest. The result was a marked deterioration on the merchandise trade balance, with the deficit rising by almost half, to $2.57bn.
Foreign trade ($ m) 1992/93 1993/94 1994/95 Exports fob 2,138 2,450 3,269 of which: clothing 1,227 1,411 1,851 jute goods 268 239 340 fish products 203 253 329 Imports cif -3,984 -4,190 -5,838 of which: textiles 928 1,008 1,321 machinery & transport equipment 369 423 724 cereals & dairy products 128 74 476(a) fuel 353 284 356 Balance -1,862 -1,740 -2,569 (a) Wider measure, covering all food and including imports under food aid. Sources: Bangladesh Bank, Economic Trends; press reports.
--and deterioration continues into the first five months of 1995/96--
According to the governor of the Bangladesh Bank (BB, the central bank), Khorshed Alam, the outpacing of the rate of export growth by that of imports was much more pronounced in the first five months of fiscal 1995/96. In the period July-November 1995 the value of imports rose by 40% year on year, to $2.8bn, while exports rose by only 7% during the same period, to $1.6bn. Moreover, according to Mr Alam, the rise in imports would have been even greater if the central bank had not intervened to request commercial banks to discourage finance and foreign exchange for non-essential imports. The import surge evidently owed much to foodgrain imports ($200m in the period July-September) to counter the serious supply shortfall (see Agriculture). For the same reason, the rate of growth in the import bill should slacken in the second half of 1995/96.
--hitting foreign exchange reserves
The widening in the trade gap in the second half of 1995 was reflected in the sharp fall in foreign exchange reserves during this period. Excluding SDRs and the reserve position in the IMF, at end-June they were $2.98bn; by end-October they were down to $2.46bn and by December a reported $2.30bn, equivalent to about four months of imports at the current rate.
International reserves ($ m; end-period) SDRs & reserve Foreign exchange position in IMF Total 1993 2,388 23 2,411 1994 3,103 36 3,139 1995 Jan 3,089 37 3,125 Feb 3,139 57 3,197 Mar 3,258 60 3,318 Apr 3,381 61 3,442 May 3,095 79 3,174 Jun 2,980 68 3,047 Jul 2,726 98 2,825 Aug 2,539 153 2,692 Sep 2,492 154 2,646 Oct 2,461 153 2,614 Source: IMF, International Financial Statistics.