Optimistic outlook for garment exports despite slow start
Despite some unfavourable numbers in July, Bangladesh's outlook on garment exports is bright this year too, with high demand from western customers due to competitive prices, industry insiders said.
Exports of woven garment declined by 4.14 percent to $1.21 billion in July, and knitwear export grew only by 4.32 percent to $1.3 billion, according to the Export Promotion Bureau.
Also, garment exports grew a tepid 0.1 percent last month from a year earlier, the smallest increase in 23 months, as foreign trade numbers indicate.
“My prediction is that Bangladesh will perform very well in the current fiscal year as the demand for the products is also still higher,” said Mustafizur Rahman, executive director of the Centre for Policy Dialogue (CPD), a research think-tank.
Bangladesh has targeted $26.9 billion in garment exports for fiscal 2014-15.
“Despite some oddities in the sector, major international retailers still have been increasing the volume of work orders to Bangladesh due to competitive prices of the products,” he said.
After trending in step with total exports in past years, Bangladeshi shipments to the US underperformed total Bangladeshi apparel exports in 18 of the last 22 months.
In fact, exports to America may fade this year, owing perhaps to weakness in US apparel spending and fallout from the Rana Plaza building collapse last year.
However, regardless of the stalled shipments to America, Bangladeshi garment manufacturers remain on track to expand their exports this year, in turn boosting imports of cotton and textiles to records to feed the domestic industry. At this rate, full-year shipments may approach $26 billion.
In effect, the outlook for Bangladeshi apparel exports this year continues to drive demand across the global cotton and textile supply chain in 2014-15.
Bangladesh exported garment products worth $24.5 billion in fiscal 2013-14, which is 13.86 percent higher than in the previous fiscal year, despite a prolonged political crisis and two major industrial disasters including Tazreen Fashions fire and Rana Plaza building collapse.
The retailers are still with Bangladesh, but the country needs to complete the unfinished works like relocation of the factories and following the compliances set by the retailers, CPD's Rahman said.
The government and garment makers also need to look to the small and medium factories, so that the garment sector performs well, he said. Otherwise, the bigger groups will perform well as they have bigger financial bases, he added.
The country will still be able to achieve the garment export target by the end of the year, said Atiqul Islam, president of Bangladesh Garment Manufacturers and Exporters Association, the garment makers' platform.
But export growth will remain lower up to September due to after-effects of last year's political crisis, Islam said. “We have to be very cautious as well, as the retailers are also looking for alternative destinations.”
Among other problems, the steep appreciation of the local currency against the greenback is another woe for the garment sector now, he said.