Bangladesh enjoyed a sustained growth in its cotton product exports to Russia and Ukraine over the past five years. In between 2017-2021, Bangladesh emerged as Russia's top apparel supplier, relegating China to second position. Along with China, Bangladesh also emerged as joint second after Turkey in meeting Ukraine's apparel requirements.
Annual cotton product imports (apparel, towels, bed sheets, etc.) by Russia and Ukraine, the two countries currently engaged in a full scale war, are valued at roughly $3.5 billion, of which Bangladesh had a market share worth $870 million (highest for a single country) in 2021.
Now the current conflict is expected to slow consumer demand both in Russia and Ukraine.
According to a recently released cotton market and trade analysis report by the United States Department of Agriculture (USDA), "Russia and Ukraine cotton product imports are expected to fall, potentially lowering product exports and therefore consumption for major suppliers including Bangladesh, China, and Turkey."
In addition to lower expected product import demand from both countries, the conflict has also driven already significant inflation even higher, with fuel and electricity prices witnessing volatile upward movements.
"Rising costs and logistical concerns in and around the Black Sea and Bosporus may complicate the flow of cotton products and textiles, which were already experiencing issues with container port congestion. This pertains to both ocean and rail freight in and around the conflict area, as well as the flow of cotton product exports to the world’s second-largest importing bloc, the European Union," notes USDA report.
Despite the prospect of a sluggish demand in the war zone, Bangladesh's import of cotton to feed the export-led apparel industry is quite buoyant. Its cotton import volume has been projected to be 8.3 million bales in the first nine months of the current fiscal compared to 8.7 million bales in 2020-21.
Bangladesh's exports to Russia-Ukraine
In calendar year 2017, Bangladesh had $600 million apparel exports to Russia that surged to $800 million last year. With $700 million worth of apparel export to Russia, China came second last year followed by Turkey ($300 million), Uzbekistan ($300 million), and Vietnam (over $100 million).
Bangladesh apparel exports to Ukraine have had a rapid growth from $30 million in 2017 to over $70 million last year, equaling the export figure of China. Turkey's export footprint, however, remained very strong with the country commanding 40 percent of Ukraine's $500 million yearly apparel imports.
