The readymade garment (RMG) industry may face challenges ahead due to global trade tensions and economic slowdowns in export destinations, said the Bangladesh Bank.
Exports maintained growth during the outgoing FY23, as per the central bank’s quarterly review of the sector for January-March 2023 released on Tuesday.
Bangladesh earned $12,255.75 million from garment exports in the January-March period of 2023, 0.77% higher than the Commerce Ministry’s target for the quarter and 6.32% higher than that in the corresponding period of the previous year.
However, this was 3.67% lower than that of the previous quarter owing to sluggish growth of the world economy.
Bangladesh’s overall garment export earnings stood at $42,613.15 million in FY22, which was 35.47% higher than that in the previous fiscal year.
In fiscal year 2021-22, the sector contributed 9.25% of the gross domestic product (GDP).
Woven garments and knitwear contributed 40.10% and 44.95% respectively of the total garment export earnings during the quarter under review.
The main destinations of Bangladesh’s garment exports are the US, UK, Netherlands, Germany, Spain, France, Italy, Canada and Belgium.
During the quarter, total export earnings from these nine countries stood at $9,123.67 million.
Of this amount, 92.20%, or $8,412.46 million, was earned from garment exports (woven 45.45% and knitwear 46.75%).
However, the earnings were a decrease of 6.74% and 0.11% compared to that of the previous quarter and that of the corresponding quarter of the preceding fiscal year respectively.
The garment sector of Bangladesh was making a fairly good turnaround in the post Covid-19 period.
However, the start of the Russian-Ukraine war in late February of last year and its resultant supply chain disruptions, high global inflation and tight monetary policy of the Federal Reserve have created some challenges in recent months.
“However, to face different corresponding challenges and to accelerate the export growth of RMG, we should focus on inter-apparel diversification, increase productivity, efficiency and product innovation,” the review said.
At the same time, Bangladesh should prioritize exploring new global markets.
Moreover, emphasis should be given on skills development of the garment workers for facing potential challenges and harnessing available benefits of this sector, it said.
The government and Bangladesh Bank have taken a number of measures, especially for facilitating production and export of the garment sector.
For instance, the central bank has formed a refinance fund worth Tk5,000 crore, from which entrepreneurs can take loans through banks at 6% interest rate, said the review.
Bangladesh Bank has expanded the tenure of loan facilities for entrepreneurs from 1 year to 3 years under this refinance scheme, it added.
