Trend of Import, Export & Remittance:

An analysis of Bangladesh Economy.

Date of Submission: November 18, 2012

University of Dhaka
Department of Banking
Course name: Risk Management & Insurance
Course code: B-208

Submitted To :
Md. Nazmul Hasan
Lecturer
Department of Banking and Insurance
University of Dhaka.

Submitted By:

Sl
no.
1.
2.
3.
4.
5.

Name
Monija Khatun
Sanzida Begum
Mst. Samsunnaher Khatun
Shatabdi Chowdury
Erfanul Alam Siddiquee

ID No.
17-001
17-002
17-003
17-024
17-056

Signature

Letter of Transmittal
Date: 18 October, 2012
The Course Teacher
Md. Nazmul Hasan
Department of Banking & Insurance
University of Dhaka.
Subject: Term paper on Trend of Export, Import & Remittance: An Analysis of
Bangladesh economy
Dear Sir,
We write this letter to inform that we have prepared the report that you have assigned us and it is
an analysis of Export Import & Remittance of Bangladesh Economy. It gave us an opportunity to
know the trend of Export Import and Remittance of our Countrys Economy since 2001-2010.
We have tried our best in preparing this term paper and hope it will satisfy your desire.
We request you to excuse us for any mistake that may occur in the term paper despite of our best
effort. We believe you will view our mistakes with your generous consideration.

Yours sincerely,

Monjja khatun
Sanzida Begum
Samsunnaher khatun
Shatabdi Chowdhury
Erfanul Alam Siddique

17001
17002
17003
17024
17056

Acknowledgement
At first, we would like to thank the Almighty Allah. Then we express our thanks to our
department and authorities for granting such an opportunity in these levels. We would like to
express our gratitude to our honorable Sir, Md.Nazmul Hasan (Lecturer, Dept. of Banking and
Insurance, University of Dhaka) for giving us such kind of report. This report is a part of "Risk
Management & Insurance ". This course is very important for our study. And this report is one
of the most important parts of this course. The topic of the report is Trend of Export, Import &
Remittance: An Analysis of Bangladesh Economy. We are really grateful to our teacher to
give us such kind of report. It was totally assert for us to finish this report without your help. We
have learned a lot of things from this report. It was a new concept to us that's why probably we may
do some mistakes. We expect your kind consideration.

Table of Contents

Executive Summary
Objective of the study

vi
1

Methodology 1
Limitation

Introduction 2
An overview of imports in Bangladesh 3
Commodities

3Partners
..3
An overview of exports in
Bangladesh.
4
Commodities
.
..4Partners
..4Growth of
export
..5
An overview of remittance in
Bangladesh..
7
Types of
remittance
.7
Remittance sending
system
7 Migration from
Bangladesh
..8
Remittance &
reserve
9

A review of Trade
Balance
..11
Trend analysis of Export, Import &
Remittance..12
Impact of Export, Import & Remittance on Bangladesh
economy.14
Correlation of Import, Export & Remittance with
GDP.18
Recommendation
.19
Conclusion
.20
Reference
21
Annexure
.22

Executive Summary
This report focuses on an analysis the trend of Export Import and Remittance of Bangladesh
Economy. We have discussed about the overall scenario of export, import and remittance of our countrys
economy. The total report can be divided into 3 board head. The first part includes acknowledgement, letter of
transmittal. This part also includes the limitation of the study. In 2nd part which is main part of the report. In the
final part we have tried to analysis the report and make recommendation. We also draw a conclusion on the above
analysis.
Export, Import and Remittances have always played important roles to Bangladeshs economy.
This study has analyzed the trend, structure and changing features of the external sector of
Bangladesh. The economic development of Bangladesh is also, to a significant extent, affected
by the trade flows with partner countries.
Import is one of the moist important factors responsible for trade balance. Due to trade deficit
where import is higher than export, the imports of Bangladesh need to look from different
dimensions.
The recent performance of the export sector of Bangladesh with special emphasis on apparel
exports to the major markets during the recession. An essential aspect of export trade is that the

demand for a countrys exports depends on the import propensities of the people of other
countries. Such propensities are known to be influenced by their economic growth.
Remittance is the second largest sector of foreign exchange earnings after garments sector. If cost
of imported raw materials is deducted from the foreign exchange earning of garments sector,
remittance is the single largest sector of foreign exchange earnings. Remittance earning is
increasing day by day but at a lower rate than the increase in emigration from Bangladesh.
Remittance helps in reducing dependence on foreign assistance. It increases national savings and
national investment.

The paper suggests that Bangladesh needs a steady growth based on foreign investment, service
income and trade. The report adds that future growth of Bangladesh will depend on promoting
export, sustaining remittances, and triggering export.

Objectives of the Study

Assessment of Export, Import & Remittance Trend in the year of 2001-2010.
To realize the correlation among Export, Import, Remittance and GDP.
To analyze the Trade Balance of Bangladesh Economy.
To know about the impact of Export, Import and Remittance on Bangladesh Economy.
To investigate the problems regarding different aspects of Export, Import and
Remittances.
To find out the ways for solving these problems.

Methodology of the study

We tried to collect data from secondary sources. The information presented in the report is from
the multiple sources and some other websites. We have used statistical tool SPSS to analysis the
correlation among Export, Import, Remittance and GDP.

Limitation of the study

Though the topic of the term paper is broad, we didnt conduct any survey or research. While
preparing this report we had faced some problems. Those are as follows: - because of broad topic
we cant understand how to complete the report. We cant arrange the data properly because the
trend analysis was on a lengthy period.

Introduction:
The economy of Bangladesh is a rapidly developing market-based economy. Its per capita
income in 2010 was est. US$1,700 (adjusted by purchasing power parity). According to the
International Monetary Fund, Bangladesh ranked as the 43rd largest economy in the world in
2010 in PPP terms and 57th largest in nominal terms, among the Next Eleven or N-11 of
Goldman Sachs and D-8 economies, with a gross domestic product of US$269.3 billion in PPP
terms and US$104.9 billion in nominal terms. The economy has grown at the rate of 6-7% per
annum over the past few years. More than half of the GDP is generated by the service sector;
while nearly half of Bangladeshis are employed in the agriculture sector. Other goods produced
are textiles, jute, fish, vegetables, fruit, leather and leather goods, ceramics, ready-made goods.
Exports of garments and textiles are the other main sources of foreign exchange earnings. Ship
building and cane cultivation have become a major force of growth. GDP's rapid growth due to
sound financial control and regulations has also contributed to its growth; however, foreign
direct investment is yet to rise significantly. Bangladesh has made major strides in its human

development .The performance of Bangladeshs 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 show
Remittances from Bangladeshis working overseas, mainly in the Middle East, is the major source
of foreign exchange earnings; s competitiveness compared to other SAARC countries .
The remittance, a driver of growth of the economy of Bangladesh, has become a cause of
concern, particularly against the backdrop of dwindling current account balance and volatility in
the exchange rates, having implications over the macroeconomic stability and prospects of
growth. The gap between actual flow of remittance and the governments target articulated in the
medium term macroeconomic framework (MTMF) is on the rise and might grow sharply in the
upcoming years. In FY 2010-11 the actual receipt of remittance totals USD 11,650.30 million
than that of the MTMF projection of USD.
Bangladesh Imports were worth 2835.10 Million USD in July of 2012. Historically, from 1995
until 2012, Bangladesh Imports averaged 4743.18 Million USD reaching an all time high of
20291.40 Million USD in June of 2009 and a record low of 1424.20 Million USD in August of
2009. Bangladesh imports mostly petroleum product and oil, machinery and parts, soybean and
palm oil, raw cotton, iron and steel and wheat. Bangladesh main imports partners are China (17%
of total), India, Indonesia, Singapore and Japan. This page includes a chart with historical data
for Bangladesh Imports.

An overview of import in Bangladesh

An import is any good or service brought into one country from another country in a legitimate
fashion, typically for use in trade. Import goods or services are provided to domestic consumers
by foreign producers. An import in the receiving country is an export to the sending country.
Imports, along with exports, form the basis of international trade. Import of goods normally
requires involvement of the Customs authorities in both the country of import and the country of
export and is often subject to import quotas, tariffs and trade agreements. When the "imports" are
the set of goods and services imported, "Imports" also means the economic value of all goods
and services that are imported. The macroeconomic variable I usually stand for the value of these
imports over a given period of time, usually one year.
The economy of Bangladesh depends on imports both for consumer items and industrial raw
materials. Bangladesh Imports were worth 2835.10 Million USD in July of 2012. Historically,
from 1995 until 2012, Bangladesh Imports averaged 4743.18 Million USD reaching an all time

high of 20291.40 Million USD in June of 2009 and a record low of 1424.20 Million USD in
August of 2009. Bangladesh imports mostly petroleum product and oil, machinery and parts,
soybean and palm oil, raw cotton, iron and steel and wheat. Bangladesh main imports partners
are China (17% of total), India, Indonesia, Singapore and Japan.

Bangladesh Imports: Commodities

Machinery and equipment

Chemicals

Iron and steel

Textiles

Foodstuffs

Petroleum products

Cement

Bangladesh Imports: Partners

China: 15.8%

India: 15.7%

Kuwait: 8.1%

Singapore: 7.6%

Japan: 4.4%

An overview of Exports in Bangladesh

Exports measure the amount of goods or services that domestic producers provide to foreign
consumers by. It is a good that is sent to another country for sale.
Bangladesh exports were worth 1900.89 Million USD in September of 2012. Historically, from
1995 until 2012, Bangladesh Exports averaged 3441.52 Million USD reaching an all time high of
15565.20 Million USD in June of 2009 and a record low of 1024.00 Million USD in October of
2009. Bangladesh exports mainly ready made garments including knit wear and hosiery (75% of
exports revenue). Others include: Shrimps, jute goods (including Carpet), leather goods and tea.

Bangladesh main exports partners are United States (23% of total), Germany, United Kingdom,
France, Japan and India. This page includes a chart with historical data for Bangladesh Exports.

Bangladesh Exports: Commodities

Here are the major export commodities of Bangladesh:

Garments (totaling $12.3 billion in FY09)

Frozen fish and seafood

Jute and jute goods

Leather

Bangladesh Trade: Export Partners

The following were Bangladeshs export partners as of 2008:

United States: 24%

Germany: 15.3%

United Kingdom: 10%

France: 7.4%

The Netherlands: 5.5%

Italy: 4.5%

Spain: 4.2%

Growth of Exports:
Bangladeshs total exports got a significant boost with an annual trend growth rate of 14.24
percent during 1985/86 to 1999/00, compared to an annual trend growth rate of below 10
percent (in nominal US dollar terms) over the earlier period of 1972/73 through 1984/85. Such a
pattern of export growth over time largely reflects the effects of progress in Bangladeshs policy

reforms over the period. Export products during the earlier period (e.g. jute and jute goods) did
have a significant effect in limiting the overall export growth, especially starting with the mid1980s. The export upturn in the latter period also reflects the fact that the export setback in jute
and jute goods was more than recouped by remarkable growth in the export of a new product
group, ready-made garments.
Jute goods:
Among jute and jute goods, only jute goods had a statistically significant low annual trend
growth rate of more than 6 percent during the early period and around 1 percent for the entire
period. In the latter period, (1985/86 to 1999/00), it had no significant growth trend. Raw jute
exports, on the other hand, had statistically significant negative growth trends for the whole
period as well as for the second period. The reasons for the decline were the growth of jute
manufacturing industry in the country and falling demand for raw jute in developed countries
due to extensive use of synthetic fibers (Hessian, 1996).
Frozen food:
Frozen food (mainly frozen shrimps) was one of the major product groups, which had a highly
satisfactory trend growth rate of 16.11 percent for the whole period. However, its growth
remained uneven, a spectacularly high rate of 31 percent during the period till 1984/85 along
with a sharp drop to about 8.4 percent during 1985/86 to 1999/00. The drop in the growth rate in
the later period may be attributed to a fall in demand in the EU markets in the late 1980s and
early 1990s, which recovered only during the second half of the 1990s. The dwindling growth of
frozen foods in the later period may also be attributed to supply constraints.
Tea:
Tea falls in the category of an exceptional export product since it had a significant growth of 13
percent during the early period up to 1984/85. However, its growth was so low and erratic
subsequently that it showed a negative growth trend during the later period. While Bangladesh
successfully recouped the loss of tea export earnings caused by the dislocation during the
countrys war of Independence, it lost the momentum in its race with India and Sri Lanka in the
late 1980s and early 1990s.
Leather and leather products:
Bangladeshs exports of hides, skins, and leather, and leather products have increased since the
early 1970s. The product group, included in the traditional export category, had a trend growth
rate of about 9 percent during the entire period, which was close to the average growth for all
exports. Its growth rate was more than 13 percent during the first period but the rate slowed to 5
percent during the second period.
Readymade garments:

Starting from a virtually zero base during the late 1970s, readymade garments exports grew at a
very rapid rate of about 95 percent during the early period up to 1984/85, and, from a sizeable
base, at a moderate but fairly high rate of 20.37 percent during the later period. Knitwear
products newly entered the export market with some significance only in 1989/90 and since then
its export grew very rapidly at a much faster rate than other readymade garments. The very fast
growth of the RMG product group as a major export earner (in gross terms) was the most
remarkable development for Bangladesh, and without this phenomenal growth, Bangladeshs
total exports which had a setback in the traditionally important exports of jute and jute goods,
could not have grown at double digit in the late 1980s and 1990s.
Knitwear products newly entered the export market with some significance only in
1989/90 and since then its export grew very rapidly at a much faster rate than other readymade
garments. The very fast growth of the RMG product group as a major export earner (in gross
terms) was the most remarkable development for Bangladesh, and without this phenomenal
growth, Bangladeshs total exports which had a setback in the traditionally important exports of
jute and jute goods, could not have grown at double digit in the late 1980s and 1990s.

An overview of remittance in Bangladesh

Remittance is the sum of money that is sent to somebody in order to pay for something or it is
the act of sending money to somebody to pay for something. It generally means money sent by
migrant workers in foreign countries to their former homes. Actually, remittance is a much
broader concept. It has many dimensions and categories.

Types of remittance
There are mainly two types of remittance:
National or domestic remittance and
International or foreign remittance.
National or domestic remittance is remittance within countries; international remittance is the
remittance from one country to another country. According to its direction international
remittance is again of two types: inward remittance and outward remittance.

Remittance sending system

Formal system: Remittance is sent formally through various ways such as demand draft,
travelers check, telegraphic transfer, postal order, direct transfer, Automatic Teller Machine
(ATM) etc.
Informal system: Hundi or money carrier system is prevalent as informal procedure of
remittance sending in most of the cases. Hundi refers to the illegal money exchange not
supported by the international or national legal structure. The exchange rate offered by the hundi
operators is 1-2% higher than the official exchange rate. They do not charge anything for
transaction. It is the fastest method of transaction. In urgent situations this is the quickest method
for sending money. The hundi operators provide door to door services. It was interesting to note
that there are other social reasons for sending remittance through hundi. Few mentioned they
send money to wives, fathers or brothers separately and preferred to keep the amounts sent
secret, as it creates tension among the family members. Hundi provides the opportunity to
maintain such confidentiality.

Migration from Bangladesh

Migration has become an important livelihood strategy for the people of Bangladesh. It has
remarkable positive impact on social development and empowerment through skill transfer and
by fostering many community development initiatives. Bangladesh has a long history of
international migration. During British rule some people migrated to UK and also USA for trade
and higher study. But after independence of Bangladesh in 1971, the flow of migration to other
countries also increased. During mid 1970s due to oil exploration of Middle East countries, there

was tremendous demand for skilled and unskilled workers. The 2higher income of the migrated
person not only changes his destiny, but has also improved the lives of his family in the home
country. Bangladesh is considered as a resourceful country of a huge labor-force. About 60
million people constitute this vast reservoir of active manpower; Bangladesh is steadily turning
her manpower into an asset through training and skill development with a view to meeting the
needs of overseas employment. It is not possible for Bangladesh to absorb the full range of
available less-skilled, semi-skilled, skilled and professional manpower within the country in an
appropriate manner and hence it is needed to find employment opportunities abroad. There are
also a number of foreign countries who are in need of importing manpower from other countries.
Overseas employment from Bangladesh started officially in 1976 with a modest number (6,078)
of workers. Presently about 7.5m Bangladeshi migrants are working all over the world. Yearly
migration from Bangladesh is about 0.3-0.4m. In the years of 2010, the migration from
Bangladesh was 3, 90,702. Bangladeshi workers are mainly engaged in 143 countries of the
world but about 90% of the migration takes place in the Middle East and Malaysia. Libya, Qatar
Saudi Arabia, UAE, Kuwait, Oman, Malaysia and Singapore are some of the major countries of
destination. Currently two types of international migration occur from Bangladesh. One takes
place mostly to the industrialized west and the other to Middle Eastern and South East Asian
countries. Voluntary migration to the industrialized west includes permanent residents,
immigrants, work permit holders and professionals. They are usually perceived as long term or
permanent migrants. Migration to Middle East and South East Asia are usually for short term and
that migrants return home after finishing their contracts of employment in the host countries.
Bangladesh has classified temporary migrant population into four categories. These are
professional, skilled, semi-skilled, and unskilled. Doctors, engineers, nurses and teachers are
considered as professionals. Manufacturing or garments workers are considered as skilled; while
tailor, mason, etc. as semi-skilled workers; housemaid, cleaner, laborers are classified as lessskilled. Figure of migration and remittance from 1976 to 2010 is shown in following chart.

Remittance and reserves

Satisfactory level of reserves of foreign currencies has positive impact on the macro economic
condition of a country. We have limited sources of earning of foreign currencies. Our import is
high but export is low. Every year we have to take loan and to wait for it to make up BOT deficit.
But now remittances help a great to have the reserves at satisfactory level. In recent times, it is
recorded that our reserve is at the maximum level where remittance is the largest contributing
sector. Hence there is no doubt that remittances and reserves have a positive correlation.
Moreover, reserves and remittance are rising over time.

Figure 1 shows trend lines of remittance, balance of trade and balance of payments. The trend
line of remittance is in the positive quadrant and is upward sloping, while that of balance of
trade is in the negative quadrant and is downward sloping and the trend line of balance of
payment has ups and downs around the horizontal axis. This implies that remittance greatly helps
to reduce the deficit in the balance of trade and some times make the balance of payment surplus.
Moreover, remittance is increasing at an increasing rate. Since in case of Bangladesh balance of
trade is almost in all years negative, therefore amount of remittances has significant influence on
the balance of payments. It is the amount of remittance which makes BOP either deficit or
surplus.

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.
Bangladesh has a long history of maintaining a negative trade balance, importing more goods
than it exports. In the 1970s and 1980s it imported goods and services twice and sometimes 3
times as much as it exported. Even during the relatively successful 1999 financial year, the
country exported just US$5.523 billion worth of products while it imported US$8.381 billion
worth of products, leaving a large trade shortfall of US$2.858 billion.

Fiscal
Year
(end
June)
2000
2001
2002
2003
200
2005
2006
Total
Average

Export
(X)

5701
6419
5929
6492
7521
8574
10422
51057
7293.86

Increase/
Decrease
%

12.59
-7.63
9.0
15.85
13.99
21.57
65.86
9.51

Import
(M)

7566
8430
7697
8707
9840
11870
13301
67411
9630.14

Increase/
Decrease
%

11.42
-8.70
13.12
13.01
20.63
12.06
61.54
8.79

Remittanc
e

1949
1882
2501
3062
3372
3848
4802
21416
3059.42

Increase/
Decrease
%

Trade
Balance
(X-M)

-3.44
32.89
22.43
10.12
14.12
24.79
100.92
14.42

-1865
-2011
-1768
-2215
-2319
-3297
-2879
-16354
-2336.29

Trend analysis of export import and remittance

Year

Import
(Billion US $ )

Export
(Billion US $ )

2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09

8.54
9.66
10.90
13.15
14.75
17.16
20.37
21.44

5.99
6.55
7.60
8.65
10.53
12.18
14.11
15.57

Remittance
(Billion US
$)
2.07
2.85
3.18
3.56
4.25
5.48
6.57
9.01

25

20

15
Import
10

Export
Remittance

Analysis:
The Bangladesh economy has grown steadily since the beginning of the decade. Economic
growth has been accelerated during this period for the major contribution of export and
remittance earnings. Bangladeshs foreign reserves have been greatly augmented and its balance
of payments position is favorable, despite the fact that the country imports considerably higher
than it exports. This is partly due to the remarkable growth in RMG exports and mostly due to
the large surge in remittance inflows. But it is important to note that despite these positive
developments, the Taka has depreciated considerably against the US dollar in the last couple of
years.
Since FY 2002 a steady rise in imports is observed. However, financing the rise in imports has
not been a major problem because of the steady rise in export earnings and surge in remittances
during the 2000s. Since remittances are used to make import payments, the growing rate of
remittances help achieve a favorable balance of payments and as well as creating a new
resources base for the country.

Impact of Export, import & remittance on Bangladesh economy:

Impact of Exports
Bangladeshs export earnings have risen rapidly since the early 1990s. Exports have grown from
around 7 percent of GDP in 1991 to around 18 percent in 2006. Two main sources of economic
growth have been manufacturing and services, both crucially dependent on the RMG sector.
Thus, any impact on the countrys export processing sector, and in particular on the large RMG
sector, will adversely affect economic performance.
The main driver of the export sector is the ready-made garments industry (RMG) which accounts
for almost four fifth of our total export earnings. Almost two and a half million people, ninety
percent of them women, are employed in the RMG sector. While a large but undetermined
number of people are involved in various ancillary and support services e.g. banking, insurance,
transport etc. to this sector, the workers are largely drawn from the poorer sections of society.
Any adverse effects on the RMG sector will thus have far-reaching implications for the entire
economy and society.
The export sector is potentially vulnerable to the on-going financial crisis as it heavily depends
on the EU and US markets which have been badly hit. Almost half of Bangladeshs exports go to
the EU, while another quarter goes to the US. High export concentration is a source of
vulnerability for Bangladeshs exports, especially in the context of the current recession.
Bangladeshs export performance held up until July-December 2008-09, but decelerated quite
rapidly thereafter. It will be observed from figure below that the export growth rate plunged in
Jan-April 2009, clearly marking the impact of the GFC. In other words the second and third
round effects of the crisis were beginning to be felt.

Figure 1: Half Yearly Growth (%) of Bangladeshs Export (Year-over-Year)

30

25.39
25

24.93

23.18

20

16.70

15
10

9.22
6.88

3.96

* Four months average growth over Jan-April2008

Source: Calculated based on data accessed from IFS, 2008 and Bangladesh Bank

Although there has been deceleration in export growth, Bangladesh is one of the few countries in
the world to achieve a positive growth rate. For example, its performance in the US market,
contrasts sharply with that of many other countries in the region. Export growth has turned
negative for India, Philippines and Sri Lanka although China and Vietnam have managed to post
positive growth rates.
Bangladesh registered a 12.5 percent export growth in woven products and 25.9 percent export
growth in knit products to the US market at a time when US imports of these items actually
shrank by 3.6 and 1.6 percent. Overall exports to the US grew by 13.6 percent in the face of a
mere 2 percent growth in total US imports over the July-December, 2008 period. This basically
indicates that Bangladesh has been increasing its market share in the US apparel market at the
expense of competing countries. Some Bangladeshi exports have been adversely affected in the
US market.
The main advantage of Bangladesh over its competitors is its price. Exporters from Bangladesh
have been cutting back on prices further in trying to cope with the crisis. Indeed, unit prices,
calculated by dividing value by quantity for the top ten RMG products exported by Bangladesh,
reveal that with few exceptions, there is a downward price trend for most categories of products.
Exports of jute goods, leather and leather goods and frozen food have been hit hard by the
recession. Export of jute goods, for example, declined by 18 percent in the first 10 months of
2008-09 while price and demand declined by 20-25 percent.

Impact of Imports
Bangladeshs imports as a share of GDP have been rising steadily over the past three decades. A
valuable portion about 27 percent of GDP was spent on import payments in 2007-08. Around
76 percent of export earnings originate in the RMG sector, of which 54 percent goes into imports
of inputs needed for the RMG industry. Given the importance of imports for Bangladeshs
economic growth and development, the implications for the balance of trade and payments, it is
important to assess the likely impact of the world recession on the volume, structure and of
imports, and the terms of trade. Import based revenues also comprise of a significant part of the
national budget and could be cause for concern.

The sharp fall in energy and food prices in the world market has benefited Bangladesh
immensely. The country is dependent on POL imports from the world market and is also a
significant importer of food. The domestic economy is therefore quite sensitive to movements in
the world price of these key commodities.
Before the onset of the recession, Bangladesh was reeling under the price pressures in the world
market, leading to a high (double-digit) domestic inflation rate and fears of an impending food
crisis. The advent of the recession brought prices down drastically, and as an importer,
Bangladesh benefited greatly with domestic price pressures falling quickly, and the government
making large savings from reduced subsidies, especially on diesel.
Bangladesh has also benefited from the terms of trade effect as the import prices faced fell more
sharply than export prices.

Impact of Remittance
Currently, about 6 million Bangladeshis work abroad, and when they send money to their
families back home these are in foreign currencies, and for the government these remittances are
one of the most important sources of foreign exchange earnings. According to the Bangladesh
Bureau on Manpower and Training (BMET), Bangladesh received more than $9 billion as
remittances in 2008. According BMET, during the last 33 years (1976-2008) Bangladesh
experienced a significant rise in remittance growth -- it was only $23.71 million in 1976 whereas
it has reached $9.02 billion (formal remittance) in 2008.
As one of the Least Developed Countries (LDC), foreign currency is needed for socio-economic
development. Remittances help Bangladesh to make investments for industrial development,
modernize its industries by importing high-tech machineries for export-oriented manufacturing,
modernize its agriculture, invest in education, etc.

On the one hand, these factors create more employment in the country and, on the other, help the
country to increase its export of manufactured goods as opposed to agricultural products, raw
materials, low quality finished products etc., as they were in the past.
In 2008, the total value of exports from its agricultural, industrial and service sectors was $13.97
billion whereas in 2008 it received $9.02 billion from its overseas workers as formal remittances.
Thus, we must consider remittance as a very important source of foreign exchange earnings for
the country. If we combine both formal and informal remittances the total exceeds the total
earnings from its exports.
Remittances also help Bangladesh in making the balance of payments favorable, or make up the
deficit between total export and import. For example, in 2008, Bangladesh exported $13.97
billion worth of goods and services and in turn imported $19.59 billion worth of goods and
services. This gave a deficit of $5.62 billion in Bangladesh's Balance of Payment (BOP).
However, in 2008, the amount of remittances that Bangladesh received from its migrant workers
abroad amounted to $9.02 billion and that helped Bangladesh correct its BOP deficit to a surplus
of $3.4 billion. In July 2009, Bangladesh's BOP surplus reached $1.39 billion. Remittance in the
first 11 months of the fiscal year 2008-2009 was $8.76 billion, which helped boost the country's
BOP.

Correlation of Import, Export & Remittance with GDP:

To show the impact of import export & remittance on Bangladesh economy we find out the
correlation of these variables with GDP as we have selected GDP to represent the economy.

Here,
Dependent variables: GDP.
Independent variables: Export, Import and Remittance.

Correlation between Import and GDP:

r:0.826
r2:0.682
Adjusted r2:0.618

Correlation between Export and GDP:

r:0.800
r2:0.639
Adjusted r2:0.567

Correlation between Remittance and GDP:

r:0.858
r2:0.736
Adjusted r2:0.683

From the above r value it is shown that there is a positive relationship between export, import
and remittance with GDP. In all case adjusted r 2 < r2, that means there is no need of another
variables to determine the GDP.

Recommendations:
Followings are some recommendations on how Bangladesh could overcome the hurdles in
enforcing effective control over exports imports and remittance.

Maintain Profile of the Exporters

Systematic Certification process (Rules of origin, quality etc.)

Introduction of Effective Risk Management techniques for Physical Inspection
Effective use of Scanner
Increase Enforcement Capacity
Impart Training
Increase Cooperation among the Trading Countries through some Mutual Customs
Cooperation
Penalize the Exporter for Breaching Rules and Regulation
Creation of International Consensus and Awareness to Ensure Quality in Export
Reduction in import control and gradual decrease in import tariff and not tariff barriers.
Proper information about job opportunities in the overseas countries has to be spread all
over the country timely and job security should be ensured in the foreign countries.
Remittance concerned information centers have to be setup and arrangement is made for
provision of proper knowledge regarding administrative activities, passport and visa
processing etc.
Training centers are to be setup for the people who want to go overseas countries for
employment opportunities.
Moreover, all types of migration related activities should be completely free from
corruption. Quick processing system of issuing passport and visa should be developed
and bureaucratic problems should be solved within very short time.
Reasonable costs should be ensured by the concerned authority.
Influence of the middlemen and their interest should be controlled and problems created
by them should be checked.
Inspirations to go abroad and other favorable influences have to be provided to the
migrant workers and employees.
Government has to make a close relationship with the concerned overseas countries to
search job opportunities in those countries.
Remittance sending procedure should be developed to make it secured, quick and
effective. Available formal channels for sending money to the native country have to be
reorganized to take as short time as possible. Moreover the remittance sending process
should be liberalized so that irregular emigrants can also send remittance through regular
channels.

Conclusion:
Bangladesh stood tall with 11.88 per cent export growth until May 2009 amid tumbling
shipments from major Asian countries because of the lingering global financial recession. As
recorded in official data, goods worth US$14.14 billion were exported by the country between
July 2008 and May 2009, compared to US$12.63 billion during the same period of last year.

India, China, Pakistan, Malaysia, Vietnam and Thailand were struggling to stop the free fall in
export shipments as the global recession cut demand of goods in both sides of the Atlantic.
Chinas export fell by a record margin in May. Exports tumbled 26.4 per cent from a year earlier,
exceeding previous record drop in February of 25.7 per cent. The growth in Indias merchandise
exports dipped to 12.9 per cent for May 2009. Pakistans exports also came down by 5.14 per
cent during the same period.
Exporters and trade experts attribute Bangladeshs export success to the competitiveness of the
countrys readymade garment sector and availability of cheap labor, although exports of frozen
food, leather and jute fell. Garment manufacturers produced lower-end products whose demand
did not fall significantly in global markets. Remaining competitive in these days of difficulties
since the quota system was withdrawn and the ongoing lingering economic slide worldwide is
rewarding for Bangladesh. There are other factors for Bangladesh remaining tall, Better delivery,
lower price and sewing quality kept Bangladesh still high and attractive when its rival countries
had to pump in billions of dollars in stimulus packages to halt the export slide. Bangladesh
would have to keep up the trend in the coming days for continuing its hold on the garment export
markets to regain the accelerated export growth rate.
The Bangladesh economy emerged relatively unscathed from the global economic crisis though
the country remains vulnerable because its exports are not diversified and it depends heavily on
migrant workers' remittances. Although the economy has become increasingly open in recent
years, total merchandise exports have remained limited, averaging 18% of GDP since 2006.
Exports remain highly concentrated both in terms of products and destinations, which carries
some risk, with readymade-garment (RMG) exports to the EU and the U.S. the current mainstay.
However, as a reputable low-cost producer of garments, Bangladesh has gained global market
share in recent years. This trend is expected to continue over the medium term, which could
partially mitigate the impact of slow growth in advanced economies. 2. The average annual real
GDP growth of the Bangladesh economy during the last six years was over 6%, aided by
conducive macroeconomic policies, strong export growth and favorable weather. GDP growth
was broad based with agriculture, industry and service sectors performing well. According to
preliminary estimates, GDP growth in FY2012, although still estimated to be over 6%, has
slowed slightly.

Reference:

www.tradingeconomics.com
www.epb.gov.bd/
www.bangladesh.com/exports

www.datacraftbd.com/dcci/inde
www.gistnet.com/cidb
importer.alibaba.com
www.mincom.gov.bd
www.tdrju.net/index.php
blogs.worldbank.org.
www.migrationinformation.org
www.unnayan.org/reports.
www.bb.org.bd/investfacility/drawing.php

Annexure
GDP growth in Bangladesh
2000
2001
2002
2003
2004
2005
2006

4.834
4.845
5.776
6.108
6.302
6.525
6.305

2007

5.959

Category-wise (2001-2010) Year

Worker's Category Total Professional Skilled Semiskilled Less skilled

Model Summary
Change Statistics

Model

.826a

R Square

Adjusted R

Std. Error of

R Square

Square

the Estimate

Change

.682

.618

.41498

.682

Sig. F
F Change

df1

10.708

df2
1

Change
5

.022

a. Predictors: (Constant), Import

Model Summary
Change Statistics

Model

.800a

R Square

Adjusted R

Std. Error of

R Square

Square

the Estimate

Change

.639

.567

.44179

.639

Sig. F
F Change

df1

8.860

df2
1

Change
5

.031

a. Predictors: (Constant), Export

Model Summary
Change Statistics

Model

.858a

R Square

Adjusted R

Std. Error of

R Square

Square

the Estimate

Change

.736

a. Predictors: (Constant), Remittance

.683

.37811

.736

Sig. F
F Change
13.921

df1

df2
1

Change
5

.014