Economists blame global slowdown, competitors' currency devaluation
Bangladesh’s export shipments in August, the second month of the current fiscal year, saw an 11.49% fall to $2.84 billion amid negative growth of apparel exports.
According to Export Promotion Bureau (EPB) provisional data, Bangladesh earned $2.84 billion, down by 11.49%, exporting goods in August, which was $3.21 billion in the same period a year ago.
Meanwhile, the apparel sector, which accounts for 84% of national exports, witnessed an 11.46% decline to $2.41 billion in August, which was $2.72 billion in the same period a year ago.
As per the data, knitwear products earned $1.24 billion, down by 10.32%, while woven goods fetched $1.16 billion, posting a 12.64% fall.
Meanwhile, in July-August of the current fiscal year, the overall exports earnings saw a 0.92% negative growth to $6.73 million, which was $6.80 billion in the same period a year ago.
Trade analysts and manufacturers have attributed Eid vacation to the downtrend of export earnings, arguing that factories, especially the RMGs, were closed during the vacation, which led to less production.
Bangladesh celebrated Eid-ul-Azha on August 12 and the apparel workers enjoyed on an average 10 days of vacation on the occasion.
However, they also blamed global economic slowdown and appreciation of taka against US dollar, which eroded competitiveness in the global export markets.
“On the occasion of Eid-ul-Azha, production of RMG factories remained closed for at least 10 days, which slowed down production, leading to less shipment and negative growth,” Exporters Association of Bangladesh (EAB) president Abdus Salam Murshedy told Dhaka tribune.
Besides, this was a lean period for the sector, which might be another reason for the downtrend, said Salam, also managing director of Envoy Textile, hoping that the situation would improve in coming months.
Economists see it in a different way and blame the global economic slowdown.
“Global economic slowdown, which created uncertainty and affected trade growth, and appreciation of taka against USD are two major factors for the downtrend in export earnings,” Khondaker Golam Moazzem, additional research director of the Centre for Policy Dialogue (CPD), told Dhaka Tribune.
Bangladesh’s competitors — India, Pakistan and Vietnam — were making the most of this appreciation as their respective governments devalued the exchange rate, mentioned the economist, adding that even China, the number one exporter of apparel goods, devalued its currency.
Though the Eid vacation could be a reason for the fall, an over 11% fall should not be attributed only to a single reason, he stated, suggesting that the Ministry of Commerce should remain alert and find out the actors playing role to arrest the country's export earnings growth.
In addition, the manufacturers also claimed that they were getting lower prices, which was another reasons for the fall in earnings.
“Work order flow is less than what it was in the past as our competitors are offering comparatively lower prices because of devaluation of their currencies,” former Bangladesh Garment Manufacturers and Exporters Association (BGMEA) vice president Faruque Hassan told Dhaka Tribune.
Besides, production cost went up due to rise in utility services and interest rate, which gave competitive edge to global competitors, Hassan mentioned.
"But the manufacturers must take orders even counting some losses. So, it is high time to think about the exchange rate for the sake of the export-oriented industry," says Hassan, also managing director of Giant Group.
"In June we saw 5.27% negative growth and again in August. It is not a good sign for the export sector," he warns, urging the government to look into the mater.