Macro Analysis /
Bangladesh

Bangladesh: IDLC-SL Macro Update

  • Rising dollar price and high commodity prices resulted in historical highest trade deficit in FY22

  • The aforementioned two factors coupled with energy price hike led to higher inflation of 9.5% in Aug 2022.

  • The import growth cooled down because of commodity price reversal and austerity measures taken by the govt.

Shopnil Paul
Shopnil Paul

Research Associate

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IDLC Securities
13 October 2022
Published byIDLC Securities

Two global factors – rising dollar price and the spiraling commodity prices in the international market – resulted in historical highest trade deficit in FY22, leading to c21% yoy fall in currency reserve to 36.5bn USD.

The abovementioned two factors coupled with energy price hike led to higher inflation of 9.5% in Aug 2022.

Yet, from the very beginning of FY23, the trade and current account balances are showing signs of improvement

The import growth cooled down because of commodity price reversal and austerity measures taken by the govt. Average monthly import LC Opening stood at USD 6bn now vs USD 8bn during H2 FY22.

Widening gap between deposit growth and credit growth (8.7% vs 15.6%) is building up liquidity pressure.

Interest rate spread in the financial institutions are declining due to rising fund costs and competitive pressure.