Export brings $4.63b in Feb, lowest in four months
Bangladesh's export earnings stood at $4.63 billion in February, the lowest in four months, although overall receipts rose 7.81 per cent year-on-year led by apparel, leather and leather goods shipments, official figures showed yesterday.
Last month's receipts took the total proceeds from the shipment of goods to $32.44 billion in the July-February period of the current financial year of 2022-23. The growth moderated to 9.56 per cent in the eight months to February, according to the Export Promotion Bureau (EPB).
The latest data comes at a time when apparel exporters are complaining about falling orders from global clothing retailers as high inflation erodes the purchasing capacity of consumers in Europe and the US, the two biggest export destinations for Bangladesh.
The impact of the weak global demand is already visible for other major sectors such as jute and jute goods, frozen fish and shrimp.
Garment exporters say the overall shipment in volume declined but receipts increased in value.
"We are getting orders for high-value clothes. This has helped us post positive growth in earnings," said Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
"Once we were used to getting orders to make jackets worth $15-$20. Now we are receiving orders to make jackets that are sold at $100. This is a very positive development."
Earnings from apparel exports, which accounted for about 85 per cent of national shipments in July-February, rose 14.06 per cent year-on-year to $31.36 billion.
Knitwear exports brought home $17.06 billion, up 13.21 per cent compared to a year earlier. Woven shipment generated $14.30 billion, a spike of 15.08 per cent, EPB data showed.
Bangladesh has performed well in new markets too, said the BGMEA chief.
"But overall export declined in quantity. If we take into account the expansion of factories in the past two years, we will see that a number of them are running below capacity," said Hassan, also the managing director of Giant Textiles Ltd.
The war in Ukraine, geopolitical tension and high consumer prices have eroded the buying capacity of consumers in Europe and the US.
"For this, we are worried," he said.
"But the good news is a number of buyers has shown interest in placing higher orders. So, Bangladesh's share in the global apparel market will increase in 2023."
Leather and leather products exports rose 6 per cent to $832 million in July-February. Other major sectors – home textiles, jute and jute goods, frozen and live fish and agricultural products – suffered more than 20 per cent decline in earnings.
Frozen fish and shrimp exporters recorded a nearly 22 per cent slump in exports to $318 million.
"The volume of exports has declined too. It has resulted in a stockpile as the shipment is not taking place as it should be," said Md Amin Ullah, president of the Bangladesh Frozen Foods Exporter Association.
"Exporters are selling products at reduced rates in order to bear operational expenses."
He, however, hoped for a rebound in export receipts from frozen fish and shrimp, grown mainly in the southwestern coastal region.
Amin said because of the falling imports, there will be a shortage of products in the western market.
"The demand will improve as people can't stop eating despite the war. So, prices will rise."
Helal Ahmed, chief operating officer of Janata Jute Mills and Sadat Jute Industries Ltd, also expects a revival in export earnings in the second half of 2023.
Exports from jute and jute goods, one of the few sectors for which raw materials are locally available, plunged 24 per cent to $610 million in the eight months ending in February, according to the EPB.
The sector suffered drops in shipment for the shrinking demand for jute yarn among carpet makers, the main user of jute yarn. The use of alternative yarn following a spiral in prices of jute in Bangladesh has also affected the export performance.
Ahmed said reduced prices of jute would lead to increased use of jute yarn. "So, the situation is expected to improve."
A sharp depreciation of the taka against the US dollar has made exports from Bangladesh attractive in the global markets. The local currency has lost its value by about 25 per cent against the American greenback in the past one year.
"Besides, orders for garments from major markets will shift away from China. So, there is an opportunity to elevate garment shipments," said Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue.
He said the prices of cotton, yarn and other items have increased and the latest export earnings figure reflects the price effect of the garment items shipped.
"The growth is price-driven to some extent as the prices of raw materials have increased. Until now, the demand side remains depressed."
The trade expert called for an increased focus on regional markets as demand is growing there.
"At the same time, productivity would have to be raised and the cost of doing business would have to be brought down."