Apparel exports during July-January period of the FY23-24 witnessed a moderate growth to key destinations but declined in the US and Germany amid persistent economic challenges.
According to manufacturers, these hurdles were attributed to ongoing economic headwinds in international markets and on domestic issues.
Based on the detailed apparel export data compiled by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) from the Export Promotion Bureau (EPB), Bangladesh managed to export apparel items worth $28.36 billion in July-January of FY24.
However, the growth was marginal, standing at 3.45%, with the total barely surpassing the $27.41 billion mark recorded in the corresponding period of FY23.
Like several past months, RMG exports to the United States, the largest single export destination for Bangladesh, fetched a negative YoY growth of 3.9% to $4.79 billion in the first seven months of FY24, lower from $4.98 billion of the same period in FY23.
Moreover, exports to Germany, the second largest destination for RMG manufacturers, continued to experience a negative trend as the country was fighting against recession-like economic turbulence and inflation.
Bangladesh shipped apparel worth $3.51 billion to Germany, reflecting a decline of 13.46% from the $4.06 billion recorded in July-January of FY23.
In the aforementioned period of FY24, with a moderate YoY growth of 12.98%, Bangladesh exported apparel goods worth $3.31 billion to the UK, the third highest destination for the country's RMG products, up from last year’s $2.93 billion, EPB data stated.
Other destinations
Exports to other major destinations also experienced either minimal or negative growth in the same period.
However, the export to the overall EU just avoided the negative growth by witnessing a marginal growth of 1.32% to $13.92 billion in July-January of FY24, slightly higher from $13.74 billion in the mentioned period of FY23.
Apparel export to some major destinations such as Spain, France, Netherlands, and Poland registered moderate positive growth by 6.05% to $2.16 billion, by 4.25% to $1.74 billion, by 11.77% to $1.22 billion, and by 20.30% to $1.11 billion respectively in July-January of FY24.
However, exports to Italy declined by 1.81% to $1.33 billion million.
During July-January of FY 2023-24, exports to Canada witnessed a very narrow growth of 0.68% to $871.27 million, EPB data stated.
In the context of Bangladesh's key export destinations, Japan, Australia, Russia, India, China, South Korea, UAE, Malaysia, Brazil, Mexico and some other countries are known as non-traditional markets.
In the first seven months of FY24, the apparel export to the non-traditional markets reached $5.46 billion with 11.69% year-over-year growth, from $3.96 billion in the same period of FY23.
The share of the overall non-traditional market in the total RMG exports stood at 19.27%, higher than the share of the single US market (16.9%) in July-January of FY24.
Among the major destinations of the non-traditional markets, exports to Japan reached $1 billion, with a Y-o-Y growth of 8.74% from $920.26 million in the last fiscal year.
Although India emerged as a potential non-traditional market, export earnings from India witnessed a downward trend since the first month of FY24 and still continue.
From India, Bangladesh bagged $516.26 million in the July-January period of FY24, registering a negative growth of 21.86% from $660.64 million in the last fiscal.
Among the major destinations of the non-traditional markets, exports to Australia and South Korea increased by 23% to $791.23 million and by 17.57% to $378.21 million respectively, said the EPB data.
What exporters are saying
Industry insiders said that Bangladesh performed better as nearly all competitors experienced sluggish exports due to the ongoing global economic turmoil.
Moreover, internal issues like energy and power shortages, political upheaval, and labor unrest also contributed to the export’s downfall.
However, they remain optimistic that exports will recover as buyers and brands are free to unload their Christmas stock and major destinations, particularly the US and the EU, are gradually controlling inflation.
Earlier, BGMEA President Faruque Hassan said that almost all of their export destinations faced severe inflation due to the ongoing global economic crisis, and they hiked interest rates to tackle the situation.
The economies of the major destinations have improved recently, and rate reductions are probably on the horizon.
“I am optimistic that the final quarter of this fiscal year will bring in a sizable number of orders,” he added.
Mohiuddin Rubel, director of BGMEA, said that exports to non-traditional markets, especially Australia and Japan, were growing and providing support given the current situation.
Manufacturers are focusing on new markets as this destination is showing hope and despite the global economic turmoil there is still room for improvement.
However, negative growth in Germany as well as the USA is a concern for them as the traditional markets are unable to make a comeback from the global economic turmoil and geopolitical concerns which impacted export, he observed.
“We have to work to increase the orders and continuously focus on the non-traditional markets. If the global situation changes, then the market will turn around, and we will be better than everyone because we are ahead in all aspects of safety, infrastructure and buyers have confidence in us,” Rubel added.
In FY23, Bangladesh bagged $46.99 billion from apparel exports.
