Global business downturn depresses garment export

Utilisation orders fall as western buyers calculate consumption contraction

| Updated: August 13, 2022 10:47:57

Global business downturn depresses garment export

Bangladesh's apparel export has been on a downturn with utilisation orders showing further fall in latest weeks under an enforced global business crunch, insiders say.

Reports of late have it that consumer demand undergoes contraction and some showrooms give a vacant look in the western world, concomitant with recession alarm ringing in some developed economies, too, amid back-to-back blowback from the global pandemic and the war in Ukraine.

According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA), utilisation declaration (UD) in the first week of August dropped 16.60 per cent compared to the same week last month.

In the first week of August, Bangladesh bagged export orders of 5,114 (UD) while the gauge recorded 6,132 in the first week of last month, the BGMEA data show.

The export of the RMG products declined by US$930 million to US$3.98 billion in July from $4.91 billion in June, Export Promotion Bureau (EPB) data.

Garment manufacturers worry that if the declining trend in export orders persists, the readymade garment-export volume could be lower in the coming months, too.

They say the export orders were stated to decline in the last quarter of the last fiscal year (FY) 2021-22 as the main buyers -- European countries and the USA -- getting under higher inflationary pressure and economic crisis.

Amid higher global food and energy prices as a fallout from the Covid-19 invasion and the Russia-Ukraine war, major apparel importers have moved on back gear, which has weighed on Bangladesh's export orders in the recent months.

Although the major European and American buyers had placed higher numbers of orders during the entire period of the last FY2021 to replenish their stores during the immediate- past two years, the export orders had gone on a backslide over the last 2-3 months, garment owners say.

They note that the export orders are ''usually disposed in three months''. In that case, when the exporters get the UD, they make their shipment within next 2-3 months.

''So, the volume of Bangladesh's RMG exports of the current orders will be reflected after 2-3 months when the manufacturers will make shipment of the products to the buyers,'' says one.

Former BGMEA President Anwarul-Ul-Alam Chowdhury says the downtrend in the export-order placement to Bangladesh has been persisting over nearly last two months.

"The higher global inflation and the Ukraine-Russia war are mainly affecting export orders in recent weeks. As the situation is not improving within a shorter period, so the coming days for the Bangladeshi apparel and textile sector is gloomy."

Mr Chowdhury mentions that sales at the US retail giant -- the Wal-Mart -- have already dropped. ''It is very bad news for Bangladesh as the shop like Wal-Mart is one of the key importers of our products."

He adds: ''The recent oil-price hike at home would also make us backpedal on the global export market further.''

In FY 2022, the RMG sector fetched $42.61 billion which accounted for more than 81 per cent of the country's total export earnings worth $52.08 billion.

Out of the $42.61 billion in apparel earnings in FY2022, some 52 per cent or $21.40 billion came from the European Union, $9.01 billion or 21 per cent from the United States, $4.49 billion and $1.32 billion from the UK and Canada respectively, the BGMEA data showed.

The remaining $6.37 billion came from non-traditional markets like Japan, Australia, Russia, India and Korea.

Bangladeshi RMG exports stood at $31.45 billion in FY2021, while the turnover figure was $27.94 billion in FY2020.

In FY2019, RMG export earnings amounted to $34.13 billion, according to official data.

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