Export Trend Bd

Introduction:

Bangladeshi international trade is extremely small relative to the size of its population, although it experienced accelerated growth during the last decade. It is not very diversified and depends on the fluctuations of the international market. The Bangladeshi government struggles to attract export-oriented industries, removing red tape and introducing various financial and tax initiatives. Between 1990 and 1995 Bangladesh doubled its exports from US$1.671 billion in 1990 to US$3.173 billion in 1995 and then almost doubled them again from US$3.173 billion in 1995 to US$5.523 billion in 1999.During the 1990s, the United States has been the largest trading partner for Bangladesh, with its exports to the United States reaching 35.7 percent in 1998-99. This percentage consisted mainly of Ready-Made Garments (RMG). Germany is the second-largest export market, with the proportion of goods reaching 10.4 percent; and the United Kingdom is in third place at 8.3 percent. Other export destinations are France, Italy, the Netherlands, Belgium, and Japan.

Trade (expressed in billions of US$): Exports Imports

Bangladesh

1975 .327 1.321

1980 .793 2.599

1985 .999 2.772

1990 1.671 3.598

1995 3.173 6.497

1998 3.831 7.042

1999 3.83 7.04

SOURCE: International Monetary Fund. International Financial Statistics Yearbook 1999.

1

Comparative Performance of Bangladesh's Exports:

The performance of Bangladesh's export sector in recent years is quite impressive especially in the 1990s when we compare it with that of world and SAARC countries. The average annual growth rate of Bangladesh export (11.91%) is higher than those of the world (9.48%) and SAARC countries (10.69%) during 1990-2003. Because of the lower export performance in the 1980s, annual average growth rate of this sector during 1980-2003 is not as impressive compared to other Asian countries and the world, though this sector shows competitiveness compared to other SAARC countries (IMF various years). Over the period of 1980-2003 Bangladesh's exports as a percentage of the world's exports remain around 0.11% to 0.12% with the exception of 1984, when it was 0.14%, and 1990-1994, when the ratio was around 0.09%. Bangladesh's exports as a percentage of SAARC countries' exports show slightly increased trend especially in 2000 and 2001.

For these two years Bangladesh's exports are 11% and 12% of the SAARC countries' exports respectively. Bangladesh's share of SAARC country's' exports was the lowest, 7.72%, in 1983. Bangladesh's exports share in the Asian developing countries, however, shows a decreasing trend in the 1990s compared to the1980s though the ratio is slightly higher in 1998 and 1999 compared to immediate earlier years. The ratio dropped to 0.59% in 2003 from 1.46% in 1980 though it was 0.75% in 2001 (IMF various years).

Export Shares to GDP:

The contribution of the export sector to Bangladesh's GDP has been gradually increasing over the years. While export share in GDP was 4.52% in 1980, this share has reached to 13.45% in 1999, reflecting 197.56% increase in GDP contribution in nineteen years (World Bank 2004). This ratio further increased in 2000, 2001 and 2002. The ratio was 15.38% in 2001. The trade openness (trade/GDP ratio) was around 14% to 16% till 1989. After that the ratio increased to 28% in 1995. In 2001 the ratio has increased to 36.88% which implies that trade has been liberalized in Bangladesh to a great extent since 1980. Over the years trade deficits ranged from 2.23% to 7.37% of GDP (World Bank 2004).

2

Export Earnings and Export Growth:

The export sector performed rather well throughout the 1990s. This sector achieved a growth rate of 37.04% in the FY 1994-95. During the twelve years, 1991-92 to 2002-2003, Bangladesh experienced negative export growth (-7.44%) only in FY 2001-2002. The terrorist incident of September 11, 2001 in USA and subsequent events may be blamed for this unexpected suffering of the export sector in the particular fiscal year. However, the export sector achieved a 9.39% growth rate, an increase of US$ 562.35 million, during 2002-2003, with total export earnings amounting to US$ 6,548.44 million compared to US$ 5,986.09 million in 2001-2002. Charts 1 and 2 provide comparative year-wise export earnings and export growth rates for twelve years.

Exports Performance Compared to Imports:

The export earnings also continuously increased over the years with increased import payments. Though import payments are always higher than the export earnings in absolute terms, the percentage of Bangladesh's export to imports is improving gradually and in recent years has been quite impressive. In FY 1983-84 the value of Bangladesh's exports was US$ 811 million and the corresponding figure for Bangladesh's imports was US$ 2073 million that represents export/import ratio of 39.12%. The export-import ratio increased to 70.09% and 67.80%, respectively, in FY2001-02 and FY 2002-03 (EPB 2004).

A Review of Trade Balance:

During the last decade, Bangladeshi exports shifted from the sale of agricultural products and raw and processed natural resources to labor-intensive manufactured goods (including clothing, footwear, and textiles), but the country, unlike neighboring India, could not catch up with the exporters of skill-intensive products. The problem of balance of trade in Bangladesh is well known: ever since the independence of the country, export earnings have persistently fallen behind import payments. Consequently, every year the country incurs a huge trade deficit.