Reading the news of export growth in September-December last year, I first thought that it is just my company that is not faring well. But my business companions from small and large industries are also facing a similarly grim situation.
As we know, brands and retailers across the globe still have a huge inventory of stockpiled products in the post-Covid period. They are managing their supply chains accordingly. To this day, many small to premium brands have 40-80% of products in stock.
We saw record RMG exports till June last year, but orders dropped by 10-30% post-June. We have to understand what happened in the global market.
The reality is buyers like Walmart and others could not clear their stock yet amid the global recession.
Our prediction is that this order shortage will continue in the coming days. We expect that the situation will see some improvement in March–April next year.
During the Covid in 2020 when everything was shutting down, the government came out with a stimulus package which was the right initiative at the time. Without that rescue package, the garment industry might have collapsed.
After the Export Development Fund (EDF) repayment schedule was relaxed, thanks to government support, the industry made a good comeback.
Another challenge for the industry is the currency pressure (exchange rates and dollar shortage). It is very worrisome. If the RMG sector suffers, then the overall economy will suffer.
If the sector fails to revive, then we will see mass layoffs, retrenchment and other austerity measures in the industry, as the cost of production is growing every day.
So, the next six to eight months will be a very challenging period for this sector.
Sharif Zahir, Managing Director of Ananta Group
