Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
Bangladesh's apparel exports to the United States -- its biggest export market -- plunged by more than 25 per cent in 2023, as a global economic slowdown combined with local production hurdles squeezed the industry.
Stubbornly high inflation and rising interest rates globally dampened consumer demand, leading to excess inventory in US retail stores.
This, coupled with domestic challenges like inconsistent power and energy supply and a US dollar shortage for raw materials, made things difficult for the local garment exporters.
They said the ongoing sluggish economy, triggered by the twin crises of the Covid-19 pandemic and the Russia-Ukraine war, has left retailers in the USA with excess inventory, discouraging Western buyers from placing new orders.
The slump is evident in both value and volume of exports, according to US official data.
Official figures from the Office of Textiles and Apparel (OTEXA) released on February 8 show that Bangladesh's readymade garment (RMG) exports to the US totalled $7.28 billion in 2023, a 25.07 per cent drop compared to the $9.72 billion earned in 2022.
Data showed that 2022 apparel earnings were almost double the 2013 earnings of $4.94 billion when the USA suspended its GSP facility for Bangladesh-made exportable goods due to poor labour and safety standards immediately after the Rana Plaza building collapse.
Local RMG, however, does not enjoy the US GSP facility.
Bangladesh shipped clothing items worth $7.13 billion during January-December 2021, according to OTEXA data.
The US imported 2.25 billion square metres of apparel from Bangladesh in the past year, which was about 27.94 per cent lower than the 3.13 billion square metres shipped in 2022.
The overall US import of apparel in 2023 from the world also decreased by 22.05 per cent to $77.84 billion, down from $99.85 billion in 2022, according to OTEXA data.
The data also showed that Bangladesh's key competitors, China and Vietnam, also registered negative export growth to the US market in 2023, reflecting a dampened Western fashion appetite.
"Overall US apparel imports had fallen in 2023, and consequently, so had those from Bangladesh," said Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
"The decline in demand is due mainly to the negative domino effects of the Russia-Ukraine war, which has driven up inflation and interest rates," Mr Hassan told The Financial Express on Friday.
This has resulted in high inventory levels held by buyers and reduced work orders throughout last year, he said.
However, the BGMEA president noted that US retail sales in December improved, leading to a decrease in inventory levels. Consequently, buyers have recently started placing more work orders and he expressed hope for increased exports from next season.
Echoing Mr Hassan's anticipation, former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Fazlul Hoque linked the decline in shipments to sluggish demand amid an internal economic crisis and high inflation in the USA.
He added the situation has shown signs of improvement in recent months, and the positive effects might be seen within five to six months.
Industry insiders explain the high exports in 2022 by the surge in work orders following the post-lockdown period due to pent-up demand, leading many entrepreneurs to expand their capacity.
OTEXA data shows that China's apparel exports to the US in 2023 stood at $16.31 billion, a 24.98 per cent decline. China's share of the US apparel market fell from 37.32 per cent in 2013 to 20.96 per cent in 2023.
Oppositely, Bangladesh's share rose to 9.37 per cent last year, up from 6.20 per cent in 2013.
Similarly, US apparel imports from Vietnam and India in 2023 experienced negative growth of 22.29 per cent and 21.42 per cent, respectively, reaching $14.17 billion and $4.46 billion.
Vietnam and India held 18.21 per cent and 5.74 per cent market share, respectively, while Cambodia and Indonesia saw respective declines of 23.58 per cent and 25.19 per cent, capturing 4.27 per cent and 5.38 per cent market share in 2023, the trade data shows.