Red-hot US recovery boosts RMG hope
The strong performance of the US economy fuelled by the Biden administration's relief cheques to the people and the ongoing rapid vaccination holds promises for the recovery of Bangladesh's garment shipment to its single largest export destination.
US economic growth accelerated in the first quarter as the government gave money to mostly lower-income households, fueling consumer spending and setting the course for what is expected to be the strongest performance this year in nearly four decades.
GDP increased at a 6.4 per cent annualised rate in the January to March quarter, the biggest first-quarter expansion since 1984. That followed a 4.3 per cent growth rate in the fourth quarter, according to Reuters.
The ongoing vaccination has boosted the confidence of consumers as they are dining out, shopping and going on holidays. Retailers have reopened stores.
As a result, garment suppliers in Bangladesh are receiving a higher number of queries for US-bound work orders.
Ha-Meem Group, one of the leading garment exporters, has got higher orders from US-based buyers compared to two months ago.
"We are full of orders up to July," said A K Azad, managing director of Ha-Meem Group. The US accounts for 90 per cent of the company's garment shipment.
"We are booked with orders for the next two months," said Kutubuddin Ahmed, chairman of Envoy Textile, another garment exporter.
Of the total garment export from Envoy Textile, 60 per cent are destined for the US. American retailers and brands buy 75 per cent of the fabrics shipped. The sales of textile by the group were $110 million last year.
Bangladesh exported textile and garment worth $1.04 billion between January and February of 2021, down 11.80 per cent year-on-year, according to data from the US Department of Commerce.
It stood at $4.03 billion in the July-March period of the current fiscal year, slightly down from $4.37 billion recorded during the same period a year ago, data from the Export Promotion Bureau of Bangladesh showed.
The demand for casual wear is higher than formal clothing and high-end value-added suits as people spend more time indoors because of the pandemic.
The business of high-end brands like Nike and Banana Republic was lower as the low-income customers prefer cheaper products during crises, Azad said.
The prices of the goods have remained almost the same as the retailers and brands are not raising them on the excuse of the fallouts of Covid-19, the entrepreneur said.
With better weather, savings accumulated during a long year of lockdowns, and an itch to make up for forced inactivity, Americans will have plenty of reasons to go out and spend, the New York Times said in an article.
Helped by several rounds of government relief payments, households were sitting on a collective $4.1 trillion in savings in the first quarter, up from $1.2 trillion before the pandemic began.
Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association, is hopeful that the recovery of the US economy would help the garment shipment to American markets make a turnaround.
"The orders from American customers have been better in the last two weeks. We are more confident because of the vaccination efforts."