Import falls, costs rise in July-August

Imports fell year-on-year in the first two months of July-August in the 2024-25 fiscal and August saw a gradual drop in imports from July, according to data from the National Board of Revenue (NBR).

Usually it takes 15 days to two months to bring imported goods home after opening a letter of credit (LC). Goods imported from India and other neighbouring countries arrive in the country quickly with traders receiving goods through land ports in a week or two since the opening of LCs, while the arrival of goods from other countries varies from 30 to 60 days.

A movement for reforms to quota in government jobs by students began in July, the first month of the current fiscal, which eventually turned into a movement for the ouster of the government. Many traders who were supporters of Awami League went into hiding after the changed political situation on 5 August. As a result, fewer LCs are being opened, affecting imports in August.

According to NBR statistics, imports dropped by 6.25 per cent to 19.8 million tonnes in July-August of the 2024-25 fiscal from 21.1 million tonnes in July-August the 2023-24 fiscal, while the cost of imports rose by 2.45 per cent to USD 12.28 billion in the first two months of the current fiscal from USD 11.99 billion tonnes in the corresponding period of previous fiscal.

August witnessed an 18 per cent drop in import of goods, as well as a fall in import costs as 9.3 million tonnes of goods were imported at the cost of USD 6.12 billion in the current fiscal, which was 1.4 million of goods worth USD 6.20 billion in the corresponding period of the previous fiscal.

Traders maintain a go-slow policy during uncertainty. Demand for products sold locally falls, thus the import of raw materials and commercial products for import substitute factories decreases.

However, the import of raw materials for exporting industries increased as the import of these goods rose to 900,000 tonnes in July-August of the 2024-25 fiscal from 850,000 tonnes in the corresponding period of the previous fiscal.

With the rise in imports, economic activities increase. A rise in the import of raw materials increases industrial production, as well as a growing import of machinery increases investment. Even a rise in commercial imports boosts economic activities. However, a drop in imports is likely to disrupt economic activities.

When asked, Premier Cement and Seacom Group managing director Amirul Haque told Prothom Alo the downtrend in the import of goods is temporary. Since reforms are underway in various sectors including banks, imports will become normal in the coming days.

Import of construction materials dropped during the uncertainty, but import of essentials did not fall that much. That is why there is no fear of a commodity crisis at this moment, he added.

This report appeared in the print and online editions of Prothom Alo and has been rewritten in English by Hasanul Banna