Full Report - Subregional Office for East and North-East Asia - escap

ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2013
previous year. This implies a marginal negative growth
of exports in 2012. Imports grew by 15%, primarily
due to higher volumes of oil and fertilizers being
imported. Overseas workers’ remittances continued to
grow and crossed the $13 billion mark in 2012. The
growth rate in remittances over the past two years
exceeded 45% partly due to Government efforts to
divert remittances from informal to formal channels.
These remittances have helped in containing the
current account deficit. However, due to a much
larger trade deficit in 2012, the current account
deficit was estimated at 2% of GDP. The balance
of payments position came under pressure due to
declining financial inflows and substantial external debt
repayments. As a result, foreign exchange reserves
decreased and the domestic currency depreciated
against the United States dollar.
In Bangladesh, there was a sharp slowdown in the
growth of both exports and imports in 2012 due
to the euro zone crisis. Exports grew by 6.2% in
2012 compared with 39.2% in 2011, while import
growth declined to 5.2% in 2012 from 41.8% in 2011.
Depreciation of the taka helped offset the impact
of the slowdown in major export destinations and
contributed to the positive growth of exports and
at the same time curbed the growth of imports.
The growth of imported industrial raw materials
and machinery was much higher than that of other
categories; both types of these goods play an
important role in maintaining higher GDP growth.
Workers’ remittances have been growing despite the
global financial crisis. After slowing to 6% in 2011,
growth in workers’ remittances again picked up in
2012, rising by 10.3%. This helped in maintaining
a current account surplus in 2012.
Large workers’ remittances
continue to grow
In Sri Lanka, the current account deficit has been
narrowing, and foreign exchange reserves have
stabilized. Both exports and imports contracted in
2012 due to the global slowdown, which helped in
containing the trade deficit. Tighter monetary and
credit policies slowed credit and import growth. Strong
growth in workers’ remittances by 16.3% helped in
narrowing the current account deficit to about 5%
of GDP in 2012 from 7.8% of GDP in 2011.
In Nepal, with a large merchandise trade deficit and
slowdown in growth of overseas remittances, the
current account balance has turned into a deficit
in recent years. Bhutan has been experiencing a
double-digit current account deficit, mainly due to
imports related to hydropower generation. However,
financing the deficit with funds from India and
other development partners has been adequate.
The current account deficit in Maldives continues
to remain high at a double-digit level. A boost in
construction activities related to the tourism sector
is partly responsible for a strong growth in imports
and consequently the large current account deficit.
The balance of payments position of the Islamic
Republic of Iran weakened considerably owing to
the tightening of economic sanctions. Export of oil
slowed as a result of the falling output of both oil
and gas. Both trade and current account balances
turned into deficits in 2012 from a surplus position
in 2011. Depreciation and volatility of the exchange
rate in 2012 made management of the balance of
payments more difficult.
The rapid increase in Turkey’s current account deficit
in recent years raises serious concern about its
sustainability in the short to medium term. Driven
by a credit-fuelled rise in import demand and
higher oil prices, it reached 10% of GDP in 2011.
The weakness of import demand and the strength
of export growth in 2012 indicate rebalancing of
the economy. Growth of exports to non-European
Union countries remained strong. The current
account deficit eased to 6.2% of GDP in 2012.
However, the large structural current account deficit
will remain a problem as plans to tackle it, such
as reforms aimed at raising the country’s domestic
savings rate and promoting domestic production
of intermediate goods and alternative energy, are
unlikely to have an impact in the short term. The
Government plans to tackle the services current
account deficit problem by promoting innovation, the
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