A sharp increase in the value of letters of credit (L/Cs) opened for imports of capital equipment and a decrease in L/C openings for most food imports appear to signal improved economic prospects for Bangladesh.

Prospects for the country's economy also appear promising in the light of other indicators and achievements.

L/C analysis

According to Bangladesh Bank's analysis of data for the 2012-13 fiscal year, there has been a 30 per cent increase in the value of L/Cs opened for imports of capital machinery. This is usually interpreted as a sign of growth in the manufacturing sector.

Meanwhile, central bank figures for the same period indicate that the value of L/Cs opened for food imports, which can place a strain on the Bangladeshi economy, have decreased for all foodstuffs except for wheat.

Promising prospects

Other bright spots in the economy include Bangladesh recording a current account surplus for the first time since it gained independence in 1971 and achieving UN-set poverty alleviation goals for 2015 two years ahead of target.

The economy has also benefited from record remittances from Bangladeshis working abroad and bumper harvests that have helped keep the food import bill and domestic prices down.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.