Consumers in the US, the UK and European Union countries, the major markets of Bangladeshi ready-made garments (RMG) have been facing the pressure of inflation.
Sales in the apparel shops in those countries have dropped and stocks have been piling up in the warehouses. As a result, the rate of new orders for the next two seasons has been declining. Meanwhile, there were reportedly incidents of existing orders being suspended.
The growth in RMG export was 35 per cent in 2021-22 financial year, which ended in June. In July, the first month of new fiscal year 2022-23, clothes worth US$ 3.37 billion were exported. The growth was only 16 per cent back then.
As the growth slowed down in July, it was being assumed that the trend will continue in the coming months as well. However, the latest data says the export in August isn’t declining the way it was being predicted.
Export Promotion Bureau (EPB) usually reveals the export data towards the end of a month. However, apart from EPB, BGMEA, the organisation of garments manufacturers, also keeps an eye on how much clothes are being exported every day.
The export cannot be considered low as yet. All we are saying is the rate of new orders is pretty low. There have been incidents of current orders being postponed. This might result in the export being declined a bit from next October
According to the association’s preliminary data, garments worth over US$ 2.74 billion have been exported in the first 24 days of this month. The revenue is 51.21 per cent higher than that of the same time in August last year.
In the first 24 days of August in 2021, garments worth more than US$ 1.81 billion (181 crore 46 lakh) was exported. And the total amount of apparels exported at the end of the month was 2.75 billion dollars.
As per the EPB data, 42.61 billion dollars of garments were exported in 2021-22 fiscal year. This export amount is 35 per cent higher than the previous year as clothes worth 31.46 billion dollar were exported in the 2020-21 fiscal year.
When asked, BGMEA director and chairman of Tusuka Group Arshad Jamal told Prothom Alo, "Many buyers are hoping to shift significant portion of their business from China due to political volatility. Bangladesh is everyone’s favourite place for that. Several buyers have hinted at expanding their business in Bangladesh."
He further said, "Retailers are suspending current orders as their sales have reduced due to high inflation whereas new orders have decreased as well. Therefore, our trade will remain low for two to three months."
On the opposite, indications have been found that garments export is actually slumping temporarily.
Just last week, Walmart, an American multinational retailer cancelled orders worth billions of dollars given to manufacturers across the world for August. This worries many RMG traders of Bangladesh as Walmart is one of the top buyers of Bangladeshi apparel products.
When asked, executive president of BKMEA Mohammad Hatem said to Prothom Alo on Saturday, “The export cannot be considered low as yet. All we are saying is the rate of new orders is pretty low. There have been incidents of current orders being postponed. This might result in the export being declined a bit from next October.”
Mohammad Hatem also said, “Buyers are shifting their business from China because of the trade war, coronavirus restrictions and ban on the use of Chinese cotton. This could give a raise to our export. However, buyers are taking a little time as the sales dropping alarmingly and the downward price of cotton. We are hoping for the situation to improve fast.”
* The report originally published in the print edition of Prothom Alo has been rewritten in English by Nourin Ahmed Monisha