Exports take a blow
Exports fell about 3 percent to $2.31 billion in June, compared to the same month a year earlier, hit by Europe's financial crisis.
Bangladesh's full-year exports grew by only 5.93 percent to $24.28 billion in fiscal 2011-12, compared to 40.5 percent a year ago, according to government data released yesterday.
The country is well below its export growth target set by the government at about 16 percent for the just concluded fiscal year.
June is the fourth straight month that monthly earnings have declined.
“Both demand and supply side factors have contributed to this slowdown,” said Prof Mustafizur Rahman, executive director of Centre for Policy Dialogue (CPD).
Rahman said recession in the Eurozone has depressed Bangladesh's exports to the region; a reduction in input prices dampened it further.
With exports flourishing in 2010-11, the government set an export growth rate at nearly 16 percent to $26.5 billion for 2011-12.
Of total export earnings, knitwear and woven products account for 78.59 percent or over $19 billion. Though woven witnessed nearly 14 percent year-on-year growth, knitwear had nearly a zero growth rate.
“We have been hit hard by the Eurozone financial crisis,” said Fazlul Hoque, former president of Bangladesh Knitwear Manufacturers and Exporters Association.
In addition, the European Union's single-step GSP facility gave an edge to Bangladesh's competitors -- Laos and Cambodia -- that produced knitwear items by importing fabrics from China, he added.
“This slowdown is a reflection of the crisis in Europe and the US that consumes nearly 90 percent of Bangladeshi exports,” said Abdus Salam Murshedy, president of Exporters Association of Bangladesh.
Murshedy, however, identified several other reasons behind the downtrend -- a declining competitive edge, persistent electricity and gas crisis and rising bank interest rates.
“No mother vessel can come to Bangladesh and we need 35 days to export to the US, while a Chinese exporter does it in 20 days,” he said.
According to Murshedy, a former president of Bangladesh Garment Manufacturers and Exporters Association, the electricity and gas situation has deteriorated further and alternative sources of energy has increased production costs.
Other exporters said the persistent impact of the global financial crisis slashed demand for goods.