2 years ago

High inflation, low demand in western markets

Apparel export caught on negative growth track

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Bangladesh's apparel export continues on a downturn after September's 7.52-percent negative growth as exporters say high inflation dampens global demand, particularly in the western hubs.

They also apprehend that the trend in the readymade garment (RMG) export might prevail over the coming months, too, as the Russia-Ukraine war rages on to upend normal course of life and business.

Shipments of the country's predominantly main export product witnessed a 7.52-percent negative growth in September 2022--first such slump after 13 months since August last year, according to Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

The country earned US$3.16 billion in September'22, down from US$3.41 billion in September'21.

The negative growth also drags on during October.

During the first 20 days of October'22, RMG exports amounted to US$ 1.77 billion against US$2.17 billion in the corresponding period of October'21, according to BGMEA data compiled from the National Board of Revenue.

When asked, BGMEA vice-president Md Shahidullah Azim said the main reason is the Russia-Ukraine war that has created volatility on the global market, resulting in high inflation in major RMG destinations.

"Consumers have been focusing more on food items compared to clothes due to inflationary pressure," he notes.

"It was projected as exporters were receiving at least 20-percent reduced rate of work orders from the estimated ones during previous months," he says, adding that buyers for last couple of months have been putting their orders on hold and deferring them.

A good number of factories are running at half their production capacity while some have not received work orders for November and December, he mentions.

And the situation is hardly to improve before January next, he predicts. They are, however, setting their sights on Asian markets alongside the traditional EU and US buyers.

He said they are in Korea to strengthen the trade relations and explore the market.

"We have to sustain our growth to achieve our US$100 billion RMG-export earnings by 2030," he said, adding that they are also working on product diversification, especially manmade fibre-based garment manufacturing.

The central bank in its quarterly review for the period of April to June of 2022 said the strong growth in the RMG industry and the boom in export earnings in the last several months were highly encouraging for Bangladesh.

"However, for the next phase of export growth and competitiveness for the RMG sector, the pace of innovation and digitization should be given high priority," it noted.

Furthermore, this sector requires the adaptability appetite for fast fashion demand and diversified products in the future to settle its own brand globally through the increasing knowledge and skills of garment workers, it also said.

Talking to the FE, a Chattogram EPZ-based factory official said a good number of factories allowed their workers to leave factory premises at lunch break as they don't have sufficient work orders.

He also said production costs have gone significantly up in absence of adequate gas supply and load-shedding despite a fall in raw material, like cotton prices.

The factory used to spend Tk 70,000 a month for diesel but now pays Tk 50,000 to Tk 55,000 per day to run the unit, he noted.

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