The Balance of Trade is the difference between the value of a country's imports and exports for a given period. This presentation focuses on the 3 most important factors that can influence trade balance: 1) Inflation, 2) Exchange Rate, 3) Trade policy. This shows the pattern of trade balance and these factors in case of Bangladesh, also explains the transmission channel.

1. FACTORS INFLUENCING
TRADE BALANCE IN
BANGLADESH

2. “The Balance of Trade is the difference
between the value of a country's
imports and exports for a given period.
The balance of trade is the largest
component of a country’s Balance of
Payments

3. Balance of Trade
Net Export
Export - Import
=
=

4. Trade Deficit
or
Negative Balance
Export > Import
Trade Surplus
or
Positive Balance
Export < Import

5. TREND
Period
Trade
Balance
2007-08 -62087
2008-09 -57325
2009-10 -62093
2010-11 -95597
2011-12 -100650
2012-13 -82891
2013-14 -103198
2014-15 -88699
2015-16 -77077
2016-17 -104921
-120000 -100000 -80000 -60000 -40000 -20000 0
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
Trade Balance

6. Major factors
3
INFLATION EXCHANGE RATE TRADE POLICY

7. INFLATION
Inflation
Price of Domestic Goods & Services Increases
Export Decreases
Trade Balance Worsens

8. INFLATION
0.00
2.00
4.00
6.00
8.00
10.00
12.00
-120000
-100000
-80000
-60000
-40000
-20000
0
Inflation and Trade Balance
Trade Balance Inflation

9. EXCHANGE RATE
Exchange Rate (taka/dollar) Increases
Lowers the Relative price of Exports
&
Raises the Relative price of Imports
Net Export Increases
Trade Balance Improves

10. EXCHANGE RATE
62.00
64.00
66.00
68.00
70.00
72.00
74.00
76.00
78.00
80.00
82.00
-120000
-100000
-80000
-60000
-40000
-20000
0
Exchange Rate and Trade Balance
Trade Balance Exchange Rate

11. TRADE BARRIERS
Import Duty Import Decreases Trade Balance
Improves
Export Subsidy Export Increases Trade Balance
Improves
Import Quota Import Decreases Trade Balance
Improves

12. TRADE POLICIES
• Bangladesh External Trade: Import Policy Order and Export Policy Order 2009-12.
• Liberalized Exchange Rate: from fixed to managed floating in 1980s.
• Monetary policy and fiscal policy should ensure strong link with trade policy tools.
• Bangladesh should identify sectors to offer and request in SATIS keeping her strategic
interests in the perspective.
• Ministry of Commerce should consult with other relevant ministries to solve problems faced
by Bangladeshi Exporters: fiscal, legal, administrative matters.
An effective trade policy should ensure that relevant govt departments and agencies work in a
coordinated manner.

13. THANK YOU!