Bangladesh’s export earnings began reaping the advantage of ongoing US-China trade war, as its merchandise export in July-October registered an 18.65% growth to $13.65 billion, riding mainly on apparel and agriculture products, trade analysts and exporters said.
The growth in October was a staggering 30.53% to $3.71 billion, according to Export Promotion Bureau (EPB) data released on Tuesday.
Industry people and trade analysts said the ongoing US-China trade war diverted many export orders from China to Bangladesh, while deliveries of shipments for Spring-summer season in the markets of Europe and the US took place last month.
“October was a peak season for Bangladeshi apparel manufacturers as the products for Spring-summer season were delivered,” BGMEA senior vice president Faruque Hassan told the Dhaka tribune.
In July-October period of the current fiscal year 2018-19, Bangladesh earned $13.65 billion, up by 18.65%, which was $11.50 billion in the same period last year.
The earnings were 12.57% higher than the target of $12.12 billion set for the period of four months.
In October, Bangladesh has earned $3.71 billion with a 30.53% growth, which is 32.68% higher than the target of $2.79 billion set for the month. In October 2017, Bangladesh export earnings were $2.84 billion, according to the data of the EPB.
RMG sector leads the growth
Apparel sector, the $30,60 billion industry with nearly 4 million workforce , has contributed over 83% to the national export earnings in July-October period of fiscal year 2018-19, shows the data.
As per the EPB data, export earnings from the readymade garments sector rose by 20.08% to $11.33 billion during the period of four months, which was $9.43 billion in the same period a year ago.
The sector posted an 11.50% increase over the target of $10.16 billion set for the period.
Of the total amount, knitwear products earned $5.88 billion, which is 17.83% higher than $4.98 billion earned in the same period a year ago. Woven products earned $5.45 billion, up by 22.61%, compared to $4.45 billion a year ago.
Faruque Hassan said many buyers, who have never sourced from Bangladesh, now started sourcing due to the US-China trade war to avert higher US tariffs.
“On top of that, we are diversifying products and introducing latest technology to improve quality and production. The safety improvement that took place at our huge apparel industry helped grow the buyers’ confidence, which resulted in sharp growth in export,” the Bangladesh Garments Manufacturers and Exporters’ Association leader Faruque said.
Centre for Policy Dialogue (CPD) research director Khondaker Golam Moazzem also said the US-China Trade war helped Bangladesh reach the higher export growth.
“Rise in export earnings indicates that the effect of US-China Trade war is becoming visible on Bangladesh exports”, Khondaker Golam Moazzem told the Dhaka Tribune.
On the other hand, Bangladesh’s exports to European countries is registering better growth than usual, which expedited the overall export growth, said the economist.
In the recent months, US has witnessed rise in employment generation pushing up the demands of goods in the market, the single largest export destination for Bangladesh, he added.
Strategy needed for the sustainability of growth
Trade analysts and sector people opined that it is a great opportunity for Bangladesh that requires intense attention from the government as well as efforts from sector people to make the growth sustainable.
Moazzem said before the US-China trade war begins, there was an opportunity for Bangladesh as the Chinese investors were shifting their businesses to elsewhere in the globe.
However, Bangladesh failed to grab due to lack of policy and appropriate strategies, he added.
“Now, in export market Bangladesh is taking advantage of the trade war,” said Moazzem.
For long term benefits, Bangladesh has to attract Foreign Direct Investment (FDI) from China. To this end, it has to be complete infrastructure development of Special Economic Zones (SEZs) on priority basis, said the economist.
On the other hand, manufacturers have to make investment in technology to augment production capacity and establish network with the potential buyers, he added.
Exporters Association of Bangladesh president Abdus Salam Murshedy said in retaining the growth and tapping the prevailing opportunity, sector people have to move to enhance efficiency and productivity.
He also urged the government to come up with policy supports to spur growth in industrial production and export wing.
Export performance of major sectors
Among the major sectors, agricultural products have posted a sharp rise by 80.37% to $366.53 million in the given period.
In addition, export earnings from the pharmaceuticals sector rose by 34.67% to $43.35 million, plastic goods by 33.140% to $40 million, and specialized and home textiles by 52.32% to $45.33 million and 3.37% to $270 million respectively.
Export earnings from the manufacturing commodities including cement, salt, stone, petroleum bi products, slag and ash earned $1.30 billion ,which is 18.17% higher compared to $1.10 billion a year ago.
However, earnings from leather and leather goods witnessed a 19.43% negative growth to $345 million during the period, which was $428.44 million a year earlier. Jute and jute goods, the third largest export earners, registered a 16.28% negative growth to $289 million during the July-October period.
Export earnings from frozen and live fish fell to $197.31 million in the given period compared to $227 million bagged year-over-year, the EPB data said.