RMG exports may drop $2b this year

Bangladesh's RMG exports may suffer this calendar year owing to an increase in tariffs in the US, the possibility of a reduction in shipments to India, and energy shortages, according to a forecast by Bloomberg Economics.

It said the headwinds could lower garment exports by $2 billion in 2025.

The country fetched $38.48 billion from RMG exports in 2024, according to data compiled by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

Overall earnings from apparel account for over 80 percent of total exports.

The earnings are critical for Bangladesh's forex reserves, it said, adding that it could cause significant damage.

"The damage could get even worse. Competitors like India could grab market share if they secure a more favourable trade deal with the US," it said.

"There is also a risk that overseas retailers could cancel contracts with suppliers in Bangladesh if there is a delay in delivering orders," it said.

"That could happen due to longer travel routes because of India's transshipment withdrawal or producers halting manufacturing due to fuel shortages," it said.

India on April 8 revoked the transshipment facility for Bangladesh's export cargo to third countries transiting through its land borders to Indian airports and ports, which exporters said would increase the cost of shipment.

Amid demands from local textile millers to reduce losses, the National Board of Revenue (NBR), on April 13, blocked yarn imports through the Benapole, Bhomra, Banglabandha, Burimari, and Sonamasjid land ports.

The neighbouring country imposed restrictions on the import of garments, agro-processed foods, furniture, and other goods from Bangladesh through land ports on May 17, raising concerns of export loss.

Bloomberg Economics said India imports around $700 million worth of apparel from Bangladesh.

"We think Indian importers would replace all of this with domestic supplies by 2027, if this ban stays," it added.

Bangladeshi garments enjoyed zero-duty access due to its least developed country (LDC) status, it said.

With its graduation from the LDC status due in November 2026, Bangladesh could see a rise in duties on its goods.

An increase in duties, logistics costs, and transit time would remove any competitiveness that Bangladeshi exporters have, it said.

Besides, higher tariffs this year might reduce global growth by 0.4 percentage points. This will affect Bangladesh's shipments too, said Bloomberg Economics.