RMG export slows, other major sectors see dip
The growth of garment shipment from Bangladesh halved in July-October compared to a year ago while the earnings from a number of major sectors declined -- all because of higher inflation in Europe owing to the Russia-Ukraine war.
This came despite overall merchandise shipment rising by 7.01 per cent year-on-year to $16.85 billion in the first four months of the current fiscal year.
The export is decelerating as Europeans are finding it difficult to make a living amid rising consumer prices.
For example, nearly three-quarters of European consumers are cutting back spending on everyday items, including food, to make ends meet amid a worsening cost-of-living crisis, according to IRI, a data analytics and market research company, reported Bloomberg.
Since Europe accounts for more than 60 per cent of Bangladesh's merchandise exports, its cost-of-living crisis has hit the shipment from the South Asian nation.
For example, the export of frozen foods declined by 23.78 per cent year-on-year to $171.67 million in the first four months of 2022-23, according to the Export Promotion Bureau (EPB).
Similarly, agricultural products fetched 23.81 per cent lower earnings at $353.62 million.
The shipment of chemical products fell 24.56 per cent to $93.59 million, and handicraft exports declined 23.81 per cent to $10.08 million. Jute and jute goods shipment fell 1.96 per cent to $326.47 million.
The sales of garment items in the international markets decelerated as well.
In July-October, garment exports grew only 10.55 per cent year-on-year to $13.95 billion. It rose 20.78 per cent during the identical period last year.
Of the total earnings from the apparel segment, $7.72 billion came from knitwear, which was up 7.14 per cent. The woven sector fetched $6.22 billion, an increase of 15.08 per cent.
The real export earnings from the apparel shipment showed a positive growth as orders are shifting from other countries, especially China, according to exporters.
Md Shahidullah Azim, vice-president of the Bangladesh Garment Manufacturers & Exporters Association, said the apparel export is struggling because of the escalated inflation in the western economies.
"International buyers have placed 30 per cent fewer orders for the next season," he said. The next season runs from March to May.
Since Europe is suffering from the energy crisis, the shipment from Bangladesh will also suffer a lot in the near future, Azim warned.
Garment exporters say they are worried that the shipment to the continent might fall by as much as 20 per cent.
The high prices of raw materials in the global markets and the increased freight costs are also hurting garment shipment.
Textile millers and garment exporters say production in the primary textile sector has declined by 50 per cent recently because of a sharp rise in fuel bills. This may ultimately impact the shipment of garments as local spinners supply 90 per cent of the raw materials consumed by the knitwear sector and 40 per cent of the inputs used by the woven sector.
Globally, the demand for luxury items dipped.
Abul Hossain, president of the Bangladesh Jute Mills Association, blamed the anti-dumping duty imposed by India on Bangladesh's jute and jute goods for the slowdown in exports of the items from the country.
"The rising use of plastics is also responsible for the slowdown."
The production at jute mills has been suffering since the beginning of Covid-19 as some factories could not run properly.
"The production of jute has been falling for the last few years in the absence of government support."
Leather and leather goods export climbed by 17.42 per cent to $428.46 million in July-October. Sectors such as home textile and footwear also fared well.
Overall exports declined 7.85 per cent year-on-year to $4.35 billion in October.
Exports hit an all-time high of $52.08 billion in the last fiscal year. This was the first time it went past the $50-billion mark.
The government has set a merchandise export target of $58 billion for 2022-23.