BANGLADESH'S TRADE PERFORMANCE IN FY 2005

UNCLAS SECTION 01 OF 02 DHAKA 005329

SIPDIS

E.O. 12958: DECL: N/A
TAGS: ECON ETRD EINV BG
SUBJECT: BANGLADESH'S TRADE PERFORMANCE IN FY 2005


1. Summary: Bangladesh's imports during the FY 2005
(July 2004-June 2005) increased by 24% to $13.2
billion, compared to FY 2004 ($10.65 billion).
Exports, on the other hand, rose to $8.7 billion, an
increase of 15% over FY 2004 ($7.57 billion). The
overall trade deficit widened from $3 billion to
$4.6 billion, a 46% increase. Strong growth in
imports of capital machinery and rising oil prices,
coupled with smaller dollar value increases in
foodstuffs, explain the significant rise in imports.
End Summary.

FY 2005 Imports
--------------


2. Bangladesh's imports during FY 2005 increased
24% to $13.2 billion. Significant changes compared
to the previous fiscal year (FY 2004) are shown
below:

a) Imports of capital machinery increased by 53%
(from $728 million to $1.12 billion) due to growth
of different manufacturing sectors as well as due to
import of telecommunication equipment. Industrial
sector growth is estimated at 7%-8%, compared with
overall economic growth around 5.6%.

b) Imports of crude and refined petroleum and
lubricant products increased by 57% (from $1.02
billion to $1.6 billion),due the increase of price
of these products in the international market. The
volume of these imports increased a modest five
percent.

c) Imports of rice increased 82% (from $144 million
to $262 million) to meet the deficit of rice
production in FY 2005, following severe flooding in
summer 2004.

d) Imports of sugar increased by 100 percent (from
$110 million to $220 million) to meet the deficit of
sugar production in FY 2005.

FY 2005 Exports
--------------


3. Bangladesh exports during FY 2005 increased by
15% to $8.7 billion. Significant changes compared
to the previous fiscal year (FY 2004) are shown
below:

a) Exports of knitwear apparel products were
increased by 31% (from $2.15 billion to $2.82
billion) due to the demand of such products in the
world market (having 80 raw materials from the local
market),the second largest export item. These
increases reflect significant increases in volumes
that offset lower prices.

b) Exports of jute goods increased by 24% (from $246
to $307 million),due to increased demand in the
world market.

c) Exports of frozen food increased by 7% (from $390
million to $420 million),reflecting continuing
growth in this industry in Bangladesh.

d) Exports of chemical products increased by 62%
(from $121 million to $197 million),principally due
to increased fertilizer exports from Bangladesh.

e) Exports of woven apparel products increased by
1.7% (from $3.53 billion to $3.59 billion). This
sector saw a surge of quota driven orders at the end
of calendar year 2004, which offset falling volumes
and lower prices in the first half of calendar year

2005. Preliminary estimates from industry are that
woven exports have fallen by six percent by value in
the first quarter of FY 2006, largely due to pricing
pressures. Export volumes are stable, mitigating
any short-term impact on local labor markets. Over
time, however, pricing pressures may force some
consolidation and factory closures in this sector.


4. Trade with the U.S.

U.S. exports to Bangladesh increased 34% during the
same period (from $248 million to $333 million),led
by increased exports of raw cotton, generators, and
telecommunication equipment. U.S. imports from
Bangladesh increased 23% (from $2.04 billion to
$2.51 billion) due to increased imports of garments,
frozen food and sports equipment. Despite U.S.
export gains, the overall U.S. trade deficit with
Bangladesh increased 21% (from $1.8 billion to $2.18
billion).
CHAMMAS