Consumers in the United States and the European Union, Bangladesh’s two largest export destinations, have continued to be concerned about the ongoing economic uncertainty caused by the ongoing conflict between Russia and Ukraine, which resulted in a decline in the growth of garment shipments during the period of July through December.
According to data provided by the Export Promotion Bureau, Bangladesh’s earnings from the export of garments to the United States, which is the country’s single largest market, totaled $4.27 billion in the first six months of the current financial year, registering an increase of 1.11 per cent year-on-year (EPB).
Even though the total revenue was $4.23 billion, growth of 45.91 percent was seen when compared to the same period a year earlier.
Earnings from the European Union market were $11.50 billion from July to December, marking an increase of 16.61 percent from the previous period. The receipts do not take into account the $2.39 billion that Bangladesh got from the United Kingdom after that country quit the union.
The revenue was $12 billion over the same period of time a year ago, and the growth in shipments was 23.83 percent. Nonetheless, the receipts included the total of $2.14 billion that was received from the UK.
This indicates that the earnings from exporting garments saw a little increase despite the higher inflation resulting from the terrible impact caused by the war that is still going on. However, compared to the previous year, the rate of increase dropped.
On the back of the government’s courageous decision to reopen the economy despite the threat posed by the deadly virus, Bangladesh saw a significant increase in exports after the global supply chain began rebounding in the middle of 2021, overcoming the massive fallout from the pandemic. This was made possible by the fact that Bangladesh overcame the massive fallout caused by the pandemic.
The same pace, however, was not able to be maintained in 2022 after the war dealt a severe blow to the global supply system in February of the previous year.
According to Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association, “the garment export may not continue the commendable growth in the next three months as international retailers and brands have placed fewer orders for the higher inflation in the western economies.” This statement was made by Hassan. “The garment export may not continue the commendable growth in the next three months” (BGMEA).
More than eighty percent of Bangladesh’s garment exports are directed to the European Union and the United States.
According to an initial estimate from Eurostat, the statistical office of the EU, annual inflation in the Euro area was anticipated to be 9.2 percent in December 2022, which represented a decrease from November’s rate of 10.1 percent.
The majority of people in Europe are concerned about rising prices, which is followed by the invasion of Ukraine, extreme weather events, unemployment, and uncertainty regarding politics as crucial concerns.
According to a report by McKinsey & Company, consumer pessimism has inched higher, with 43 percent expressing concern about economic recovery. This number is up from 36 percent in June when the same question was asked.
However, the consumer price index in the United States had a decrease for a sixth straight month, resulting in an annual gain of 6.5% notwithstanding the trend.
According to an earlier report by CNN, despite this, consumer confidence in the United States decreased in November as inflation and economic uncertainty continued to loom large and likely affect plans for Christmas buying.
In the period of July to December, shipments to Germany reached a total value of $3.45 billion, representing a year-on-year increase of 3.54 percent. Within the European Union, Germany is Bangladesh’s single largest export destination for garments.
The sales to Spain and France increased to a total of $1.71 billion and $1.41 billion, respectively, representing a 17.62 percent and 33.08 percent increase, respectively. The percentage that was exported to Poland fell by 18.43 percent.
Bangladeshi textiles and clothing were the source of imports worth $2.39 billion to the United Kingdom. The amount of clothing purchased by Canada was 774,16 million dollars. The rate of economic expansion in the two nations was determined to be 11.89 percent and 28.42 percent, respectively.
Even if the growth of garment exports to the major conventional markets, such as the United States, the European Union, and Canada, has been slowing down, the growth of garment exports to new destinations has been increasing.
Between July and December, the amount of goods exported to non-traditional markets increased to $4.04 billion, representing a 32.19 percent increase. In the same time period in the year 2021-22, it amounted to $3.05 billion.
According to data provided by the EPB, exports to Japan reached $754.72 million, marking a gain of 42.54 percent, while exports to India increased by 50 percent, reaching $548.89 million. Both of these figures are in Asia.
Hassan continued by saying, “In the midst of the ongoing global slump, Asian markets can look to be a saviour.”
The export of garments to South Korea, Japan, and India has been expanding, and it is expected that this growth will continue in the not too distant future.
Hassan, on the other hand, issued a warning that the prices of garment items measured in units might not rise as much as they did the previous year.
In 2022, purchasers increased the unit price of garment products in response to an increase in the cost of raw materials such as cotton and chemical as well as increased freight costs.
According to the head of the BGMEA, “the prices of raw materials are stabilising, and the freight charge is also dropping, so purchasers may not choose to raise the prices of per unit clothing goods.”
Due to the fact that the outcome of the conflict will determine everything, he was unable to make any predictions on how the current fiscal year would pan out for the garment industry.
The textile and clothing industry is responsible for around 85 percent of the country’s total exports.
Reference:
Mirdha, Refayet Ullah. “RMG Export Growth Slows in US, EU for Global Uncertainty.” The Daily Star, 13 Jan. 2023, https://www.thedailystar.net/business/economy/news/rmg-export-growth-slows-us-eu-global-uncertainty-3219796.
