The exports of apparel items witnessed a modest gain in the top destinations – both in traditional and nontraditional markets – in the first three months (July-September) of the current 2022-23 fiscal year (FY).
According to the country-wise detailed apparel export data of the Export Promotion Bureau (EPB), the apparel export of Bangladesh was $10.27 billion, fetching a growth of 13.41%, from $9.05 billion in July-September of FY22.
In the aforementioned period, Bangladeshi apparel manufacturers shipped apparel items worth $2.01 billion to the United States (US), the largest single export destination for Bangladesh, fetching a thin year-on-year (YoY) growth of 5.13%, from $1.1 billion in the same period of FY22.
In Q1 of FY23, they exported RMG worth $1.51 billion to Germany, the second largest single export destination, registering a narrow growth of 1.34% from $1.49 billion in the same period of the last FY.
Registering a medium growth of 15.64%, Bangladesh exported apparel items worth $1.19 billion to the UK, the third highest destination for the country's RMG products, up from last year’s $1.03 billion, EPB data said.
The apparel export to the other major destinations such as Spain, France, Netherlands and Italy also registered a modest positive growth of 21.35% to $842.45 million, 36.72% to $576.49 million, 33.65% to $421.63 million, and 20.51% to $369.87 million respectively.
However, in Poland, exports marked a negative growth of 24.49% to $293.83 million.
During the mentioned period, the apparel export to the overall European Union (EU) market soared by 12.43% to $4.94 billion from $4.39 billion in the same period of the last fiscal year.
During Q1 of FY2022-23, exports to Canada reached $334.65 million, fetching a YoY growth of 17.4% from $285.04 million in the same period of last FY.
Non-traditional market
Japan, Australia, Russia, India, China, South Korea, UAE, Malaysia, Brazil, Mexico and some other countries are known as non-traditional markets.
The apparel export to the non-traditional markets reached $1.79 billion with 25.47% YoY growth, from $1.43 billion in the same period of the last FY.
Among the major destinations of the non-traditional markets, exports to Japan reached $320.4 million, with a YoY growth of 16.6% from $274.8 million in the last fiscal year.
From India, Bangladesh bagged $306.39 million in the Q1 of FY22-23, registering a growth of 66.20% from $184.34 million in July-September of the last fiscal year.
Among the major destinations of the non-traditional markets, exports to Australia, South Korea, and Mexico increased by 14.21% to $214.71 million, 49.84% to $131.1 million, and 45.11% to $85.49 million respectively, said the EPB data.
The narrow growth rate of export
Exporters said that although export earnings soared in Q1 of FY23, they experienced a narrow or sluggish growth rate, signalling something alarming in the coming months.
The reason for the worry is the fact that the sector earned only $3.16 billion in September, fetching a negative YoY growth of 7.52%. The export earnings were $3.41 billion in the September of the last fiscal year.
“Exports to major markets registered positive growth in Q1 but at a very narrow rate. Exports experienced negative growth in September already and we fear that the trend may sustain for the next few months,” Shahidullah Azim, vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) told Dhaka Tribune.
BGMEA Director Mohiuddin Rubel also echoed him and said that it is clear from the data that growth is decelerating in major markets including US and Germany due to the global economic turmoil and impact on retail markets.
“The growth rates from the USA and Germany – our first and second largest destinations – are only 5.13% and 1.34%, respectively, indicating a clear sluggishness in growth,” he added.
Non-traditional markets show hope
However, growth from non-traditional markets show this is where the RMG industry now plans to pivot towards.
Already, exports to Japan, India and Korea have gradually increased, however, Russia was an emerging market but exports seem to decrease due to the war.
The BGMEA is preparing a roadmap to export $100 billion worth of garment items by 2030 and capture 10% of the global market by 2025, riding on exploring new markets in Asia, East Asia, Australia, and the Middle East.
Shahidullah Azim said that they should find new markets in Asia, the Middle East, and Australia as the impact of the geopolitical crisis is lower there and these are growing economies adding that they have to enter these markets and growth must be maintained at any cost.
Mohiuddin Rubel said that productivity and efficiency are major concerns as average productivity in Bangladesh is around 45% lower than in Vietnam and Turkey.
“We need to overcome the vulnerabilities like product and market overconcentration, absence in the niche market, improvement of backward linkage industries,” he added.
