Signs of the economy turning around in November

Export earnings fetched a record $5.092 billion in November. The previous record was $4.9 billion in December 2021

Export earnings showed a record jump in November along with remittance income rising again from higher labour migration. 

Moreover, inflation continued to decline in November.

Latest data from Bangladesh Bank, Bangladesh Bureau of Statistics (BBS), Export Promotion Bureau (EPB) and Bureau of Manpower, Employment and Training (BMET) shows that export earnings turned out to be a record $5.092 billion in November. The previous record was $4.9 billion in December last year. 

Bangladesh also broke its previous record for manpower export in 2022.

Meanwhile, remittance inflow increased a bit in November to $1.59 billion after two months of following the downward trends. In November, inflation was 8.85%. 

Amid the ongoing global economic turmoil, all these important economic indicators bring hope for Bangladesh in November.

But will this economic turnaround sustain in the coming years, especially when many fear 2023 might bring famine?

What experts are saying

Economists and business leaders are saying, to sustain this economic turnaround, the authorities need to look at the main issues that caused the economic turmoil in September and come up with a quick solution. 

Even though the remittance inflow is showing an upward trend, Zahid Hussain, lead economist consultant of the World Bank believes that it did not increase as much as it should when we take the record number of manpower export into consideration.

“I myself am a bit puzzled while looking for the exact reasons behind the sudden drops in remittances in the last few months as a record number of workers went out of the country. Neither their salaries have decreased, nor the cost of living increased too much in the countries they went to. So, I think remittance will follow the upward trend in upcoming months as well,” he said.

Asking why there is a minimum impact on remittances even after exporting so much manpower abroad, he said: “I believe that fixing the different rates of the dollar has a big impact on it. As a result of this, overseas workers may get confused. So, remittance senders may now be looking for other ways. But sufficient remittances will be needed to overcome the dollar crisis in the coming months. It is important to reach a correct decision in this regard quickly,” he added.

Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh also said: “On the remittance front, there are still some shortfalls that need to be overcome to increase the foreign currency reserves. Workers are going abroad in higher numbers every month, but remittances are still not coming through official channels as much as expected.”

“While the export sector is doing well, the trend must continue to minimize the pressure on foreign currency reserves,” he added.

Planning Minister MA Mannan struck an upbeat note on Saturday, saying he hopes the country's economy will be completely normal by March or April next year. 

“The remittance and export earnings have increased in the last month. We hope they will gradually return to the previous level,” he said.

Inflation in November

Inflation in Bangladesh is starting to cool off for the third consecutive month in November. 

Inflation in November dropped down to 8.85% from 8.91% in October. It was 9.1% in September and 9.1% in August. 

Food inflation also dropped from October, down to 8.14% in November from 8.5% in the previous month.

However, consumers had to spend more to buy non-food items, evident as non-food inflation rose to 9.98% in November from 9.58% in the previous month, the BBS data also showed.

Remittance shows hope

$1.59 billion in remittances arrived through the legal banking channel in November, which is the highest amount in the previous three months.

In October, remittance inflow was $1.52 billion and it was $1.53 billion in September. 

However, when compared to last year, the figures are still lower.

From September to November this year, the nation received remittances worth $4.65 billion, compared to $4.92 billion during the same time period in FY22.

Bangladesh received $19.58 billion in remittances from January to November 30 this year, down from $22.071 billion in 2021. 

The amount was $21.75 billion in 2020, $18.355 billion in 2019, and $15.544 billion in 2018.

Since 1976, a total of around 1.46 crore people have gone abroad and remitted $271.9 billion.

Record manpower export

According to the Bureau of Manpower, Employment and Training (BMET), the country sent 76,585 workers abroad in November.

Keeping one month in hand, Bangladesh already made an annual record in manpower exports by sending 1,024,458 people abroad this year.

This is the highest number since 1976, the year when the authorities started keeping official records. The previous record was 1,008,525 in 2017. 

Data analysis shows that the majority of the workers went to three Middle Eastern countries — Saudi Arabia, Oman and the United Arab Emirates (UAE) — this year.

Zahid Hussain suggested bolstering new destinations for manpower exports. 

Export earnings hit $5 billion mark

For the first time in history, Bangladesh's export earnings crossed the $5 billion mark in November, according to the Export Promotion Bureau (EPB). 

According to EPB, Bangladesh exported goods worth $5.09 billion in November, which is 26.01% higher than the same month of the previous fiscal year.

Export earnings were $4.36 billion in October and $3.91 billion in September.

Industry insiders said that the export earnings increased due to the resurging Western fashion orders, pricier raw material imports and shipment of export consignments that were previously on hold. 

During November, Bangladesh exported RMG worth $4.37 billion, fetching a growth of 35.36% from $3.23 billion in the November of FY22.

Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said that the export earnings of November were much higher than expected, considering concerns about sluggish Western markets. 

“It is a good sign for our sector and a good sign for the county's economy to make a recovery," he said, referring to the crucial garment industry. 

He also said that the record export total was partly attributable to price hikes after raw material costs increased abnormally during the last six months and freight costs rose a year ago. 

Hassan said some buyers had also asked manufacturers to hold shipments of goods for the last couple of months, some of which were finally moved in November. 

He also said that Bangladeshi garment manufacturers started making higher value-added items after technological upgrades, boosting earnings. 

He expressed optimism that the trend of higher earnings will continue in the coming months if gas and electricity supplies can be stabilized.

Experts also suggested focusing on goods like jute and jute goods, agricultural items such as vegetables, fruits and dry foods, pharmaceuticals and frozen and live fish. 

Bangladesh surpasses Vietnam again in global RMG exports

In the meantime, Bangladesh bagged the second position again in the global apparel export market in 2021 after it was pushed back to the third position by Vietnam in 2020.

World Trade Statistical Review 2022, released by the World Trade Organization (WTO) on Wednesday, showed that Vietnam's share in global ready-made garment (RMG) exports dropped to 5.80% in 2021 from 6.40% in 2020.

The share of Bangladesh in the global RMG market also increased to 6.40% in the last year from 6.30% in 2020. The ratio was 6.80% in 2019 and 6.40% in 2018.

However, the experts and manufacturers said that they should chalk out the path to maintain the tempo or to sustain the upbeat trends of the development of two macroeconomic elements.