The unprecedented coronavirus pandemic has put a scar in apparel shipments as earnings from the country's main export item in the immediate past fiscal year fell significantly compared to anytime in the past decade.
The earnings declined 18.45 per cent year-on-year to $27.83 billion in the outgoing fiscal year.
This is $6.3 billion less than that of fiscal 2018-19 and falls $10.37 billion short of the target set for fiscal 2019-20.
The target for the immediate past fiscal year was $38.20 billion. Bangladesh exported $34.13 billion-worth apparel in fiscal 2018-19.
But, things are looking up.
In June, the final month of the immediate past fiscal year, the earnings were $2.12 billion, according to data from the Export Promotion Bureau, customs and Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
June's earnings were 11.43 per cent lower than a year earlier but up 72.4 per cent from the previous month.
The sector experienced a historic low in shipments in April this year. Earnings from the garments sector reached only $0.37 billion, the lowest receipt since the sector started taking shape four decades ago.
Bangladesh's garment export of $34.13 billion in fiscal 2018-19 was 11.49 per cent higher than the preceding year.
The compound annual growth rate of apparel exports during the past five years was 6.86 per cent. The rate is even higher for the past 10 years at 10.70 per cent.
The receipts from apparel, which typically makes up 84 per cent of national exports, was lower mainly because of two reasons fuelled by the pandemic coronavirus.
Primarily, thousands of retail stores were shut in the Western world and secondly, factories were shut in Bangladesh due to coronavirus.
However, the retailers in Europe and the US started reopening their stores from May.
As a result, garment shipments and production in the local factories are rebounding gradually.
A quarter-wise analysis of export performance reveals that the industry was already distressed with many challenges including an increase in the cost of production and stronger currency exchange rate, according to BGMEA President Rubana Huq.
The decline in export during the fiscal year in actual amount is $6.6 billion, which is around one-fifth of what Bangladesh exported last year.
A closer look reveals that of the $6.6 billion, $1 billion worth of export was lost in the first half of the year and the remaining $5.6 billion in the latter half.
"We lost $4.8 billion worth of export just in three months, i.e. April-June 2020. This shows the severity of the COVID's impact on the industry," Huq said.
According to global projections and forecasts by industry insiders, currently, the factories have orders equivalent to 55 per cent of their capacities on an average, which is expected to pick up a bit by the year's end, that is by 70 per cent of the capacity by December 2020.
A long-term prediction may not be pragmatic in this volatile situation. Yet, it can be hoped that as much as 80 per cent of regular exports may be regained towards the middle of 2021.
However, concerns remain over the fact that factories are still struggling with cash flow and credit, with the amount of resulting unsettled liability/payables assumed to be about $1.9 billion.
Since March, 179 factories were forced to shut down and more may follow the trail, Huq told The Daily Star.
Garment exports started rebounding because of the reopening of the economies in Europe and the US, said Ahsan H Mansur, executive director of Policy Research Institute (PRI).
However, some reforms are needed in the garment sector and the BGMEA has been trying to bring those about, he said.
For instance, Bangladesh is much too dependent on cotton fibre-based garment items and needs to make garment items from manmade fibres.
Only five basic items comprise nearly 80 per cent of the exports and at least 50 such items should be developed, he said.
Mansur, who is also a former economist of the International Monetary Fund, also suggested grabbing more export destinations in Asia, Central Asia and Latin America along with Europe and the US.