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Thursday, July 12, 2012

Sluggish export growth

Bangladesh's export grew only by 5.9% in FY12, compared to 40.5% in FY11. So, it missed the government's target (16.0% over FY11). In fact, year-on-year export growths in the last 4 months of FY (starting in March 2012) were negative (-7.2%, -7.1%, -4.2%, and -3.1%).

As economic crisis has been taking place in US and Europe, the demand for Bangladeshi products from those economies remained low. Moreover, production costs increased significantly due to higher energy prices including electricity and higher banks' interest rate.

It seems, Bangladesh's export fell into a growth trap (picture below). Since FY04, the export growth rate were never able to cross the mark of the previous year. In fact, the trend of export growth since FY06 has been falling. So, the policymakers need to work more, especially those who think themselves as trade expert.

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