Exports slumped over 17 percent year-on-year to $3.07 billion in October as the strong local currency continued to depress apparel shipments, government data shows.
This is the third consecutive month to witness such a decline. If the trend persists, the country will not be able to achieve the current fiscal year’s target of $45.50 billion.
According to data from the Export Promotion Bureau (EPB), October’s earnings were 11.71 percent lower than the month’s target of $3.48 billion.
Export receipts of the current fiscal year’s first four months are also nearly 7 percent lower than the target of $14.33 billion.
Exporters have blamed the sluggish exports on the local currency being stronger compared to the US dollar. For the last couple of months, they have been asking for the taka to be devalued as competing countries have depreciated theirs to give their exporters an advantage.
Another reason, The Daily Star came to know from exporters, was a reduction in H&M’s purchases from Bangladesh.
“H&M has a big stock of unsold apparel products. So it is buying less now,” said KM Rezaul Hasanat, chairman of Viyellatex Group, one of the largest apparel exporters in Bangladesh.
He said H&M alone accounted for around 10 percent of $34 billion worth of garments exported from Bangladesh in fiscal 2018-19. Factories that depend on orders from H&M have been affected badly, he said.
Also a looming recession in Europe and the US has made consumers cautious about buying clothes, he said.
Asif Ibrahim, vice chairman of New Age Group, believes the strong taka was eroding local exporters’ competitive advantage with other countries.
Ibrahim, also a director of the Bangladesh Garment Manufacturers and Exporters Association, said the latest export data of October 2019 was very alarming.
“Countries which compete with Bangladesh have not only devalued their currencies significantly but also provided both fiscal and non-fiscal incentives to their exporters to boost their competitiveness in the international market,” he said.
He said it was high time that the government took exchange rate matter very seriously and nullify existing notions among certain policymakers of exporters enjoying many benefits through short- and medium-term stimulus packages.
“If this negative trend in export continues it is going to have a severe detrimental impact on the Bangladesh economy,” he remarked.
The latest EPB data shows that Bangladesh received $12.72 billion from merchandise exports in the fiscal’s first four months till October, down 11.21 percent from the target.
A slowdown in apparel shipments, both woven and knitwear, led the fall.
Bangladesh bagged only $5.5 billion from export of knitwear during the July-October period, down nearly 7 percent from the target and 5.73 percent from the same period a year ago.
Similarly, woven garments received $5.04 billion from exports, down over 17 percent than the target and 7.67 percent from the corresponding period in the previous year.
Home textiles, another major foreign currency earner that earned $852 million last year, also registered over 11 percent negative growth than that of a year ago.
Exports of leather and leather goods and shrimp, two major foreign currency earning sectors, also posted negative growth so far this fiscal year. Of the major export sectors, only jute and jute goods posted nearly 9 percent positive growth in July-October period.
Yet, Hasanat of Viyellatex Group, believes Bangladesh’s exports will see positive growth at the end of the fiscal year in June 2020, though the target may not be achieved.