Export earnings defy hard times

Despite the persisting volatility in the global economy and higher  consumer prices in the western markets, Bangladesh's merchandise shipment grew 5.89 per cent year-on-year to $5.13 billion in January, official data showed yesterday.

This was the second-highest single-month shipment in the history of the country. The previous highest was recorded in December when exporters brought home $5.35 billion.

The higher export earnings, along with rising remittance flow, would give some breathing space to the economy reeling under foreign exchange instability owing to US dollar shortages. Remittance flow to Bangladesh rose to a five-month high in January as expatriates sent home $1.95 billion.

M A Razzaque, research director of the Policy Research Institute of Bangladesh, describes the January earnings as commendable given the volatile economic situation.

The recent depreciation of the local currency against the US dollar contributed to the overall export receipts since the country's competitiveness has improved globally, he said.

The taka has weakened by about 25 per cent against the US dollar in the past one year owing to the crunch of the American greenback.

In July-January, the first seven months of the current financial year, exports grew 9.81 per cent year-on-year to $32.44 billion, according to data from the Export Promotion Bureau (EPB).

Although the overall monthly earnings were strong, only the apparel and leather sectors performed well in January. Other potential sectors performed poorly because of higher inflation in the major export destinations fueled by the Russia-Ukraine war.

The garment shipment, which accounted for about 85 per cent of national exports, rose 14.31 per cent year-on-year to $27.41 billion in July-January. Of the sum, $14.96 billion came from the knitwear segment and $12.45 billion from the woven segment, registering 12.70 per cent and 16.30 per cent year-on-year growth, respectively.

Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association, credited four factors for the strong showing by the apparel sector amid challenges at home and abroad.

The factors are the rising production of value-added garment items, the expansion in capacity, the shifting of orders from China, and the improvement of the safety measures that brightened the image of the country and the sector.

He said local garment manufacturers have installed a lot of machinery after Covid-19 outbreaks receded as the demand was expected to receive a boost in the post-pandemic world, contributing to a spike in productivity.

"Many garment-producing countries have been forced to cut production because of the fall in orders owing to the volatility in the global economy. So, Bangladesh is getting more orders."

According to Hassan, Bangladesh is doing well in the manufacturing of value-added garment items.

"Many local garment exporters now sell a shirt worth $20 to $25 apiece. This was unthinkable even two to three years ago."

Moreover, Bangladesh's apparel shipment is faring well in new markets such as Japan, India, South Korea and Malaysia as well as some Middle Eastern countries along with its traditional markets, namely the United States, the European Union and Canada.

Leather and leather goods shipment rose 7.37 per cent to $733.09 million in July-January compared to the same period a year earlier, EPB data showed.

Md Saiful Islam, a former president of the Leathergoods and Footwear Manufacturers and Exporters Association Bangladesh, however, thinks that the earnings from the sector would have grown by 25 per cent had the central effluent treatment plant in Savar been fully operational.

"The capacity of the local industry has improved a lot."

Besides, the entrepreneur said, orders are shifting from China as international retailers and brands are reducing their reliance on the world's second-largest economy, known as the "world's factory".

"Global retailers' confidence in Bangladesh has grown a lot as local manufacturers continued uninterrupted supply of goods even during the peak of Covid-19 whereas almost all supplying countries halted production," he said.

PRI's Razzaque also said the shifting of orders from China because of the geopolitical tension has played a vital role in gaining more orders from international customers.

The export earnings from the sectors such as frozen and live fish, agricultural products, pharmaceuticals, jute and jute goods, carpet, home textiles and furniture declined year-on-year in the first seven months of 2022-23.

Bangladesh's export has kept posting positive growth despite the worsening global economic situation.

The exports of goods and services from Bangladesh would contract by 7.2 per cent in the current financial year, according to an estimate by the International Monetary Fund. 

The Bangladesh Bank, however, has forecast a 10 per cent export growth for the financial year that ends in June.

The import and export growth rates are expected to be moderate significantly due to the base effect and cooling down of internal and external demand in the backdrop of possible economic recession in the advanced economies, said the central bank in its latest monetary statement.

And BGMEA's Hassan said higher consumer prices in the major markets and the rising cost of production following the hike in the prices of gas and power locally are posing challenges to the apparel industry.