Bangladesh Bank Report
Economy remained buoyant during first quarter of FY19
Aided by robust growth in export, inward remittance, domestic demands, moderate inflation and some other positive developments the country's economy during the first quarter of the ongoing financial year remained buoyant.
This was revealed in Bangladesh Bank's latest quarterly report last week and indicates a stable growth throughout the fiscal (2018-19 or FY19).
The report said in the first quarter of the running financial year (July-September, Q1FY19) the economy saw a strong domestic demand, growth in remittance inflows (14.1 per cent) and a pick-up in exports (14 per cent).
It said at maintaining compliance issues in the workplaces buyers' confidence in the RMG industry aided exports and due to improved energy supply the economy enjoyed buoyancy during the period.
Among the indicators that the central bank favored on positive economy were moderate food inflation at lowering rice prices and at decelerating import and increasing foreign currency inflow that kept reserve in satisfactory level.
When contacted a senior BB official said the first quarter report was for the first three months and as per second quarter analysis the data of which is already publicly available made by different government agencies till December show the first six-month growth in the economy that is heading towards positive developments.
He referring December figure for remittance and export said these two major foreign currency earning earned a total US28 billion till December of which export earnings were $20.5 billion and remittance were $7.5 billion.
He hopes that at current revenue collection growth, private sector credit and annual development programmes implementation rates and good work orders from buyers would further enhance the economy during the second half of the FY19.
The BB quarterly report says a deceleration in import growth together with strong remittance inflows and a pick-up in exports narrowed current account deficit to USD1.4 billion in Q1FY19 from USD2.7 billion in Q4FY18, a lower financial account surplus due to lower medium and long-term loan inflows led to a deficit of USD 158 million in overall balance.
As per BB's another month report that was revealed last week, the deficit of July-November of the ongoing fiscal also further lowered to $2.5 billion than during the same time of the last fiscal of $4.7 billion.
Another BB official said the trade deficit is likely to be narrowed in December balance of payment calculation as against decelerating imports the remittance and exports are in better position.
He referring to the BB's latest quarterly report said a lower-than-projected growth in government borrowing from the banking system (2.9 per cent), and moderating time and demand deposit growths (9.6 per cent and 5.0 per cent respectively) kept M2 growth (8.8 per cent) in Q1FY19 which was slightly below the monetary programme target of 9.2 per cent for H1 FY19.
During this period, despite moderate deposit growth, excess liquidity in the banking system remained stable. Weighted average lending and deposit interest rates declined as credit growth moderated.
The BB official said overall non-performing loans edged up to 11.5 per cent in Q1FY19 driven mainly by state-owned commercial banks and the capital market performance exhibited a mixed trend during Q1FY19, as reflected in the price indices, market capitalization, price earnings ratio, and turnover in the DSE.
He said strong growth in government expenditure against a moderate growth in revenue collection led to a fiscal deficit of BDT 189 billion in Q1FY19.
With a limited amount of bank borrowing, deficit financing primarily relied on non-bank borrowings as in the recent past.