The last time Bangladesh registered a drop in export earnings was in FY02 when exports fell by 7.44% at $5.99 billion
Bangladesh’s exports earnings have registered a sharp decline of nearly 17% at $33.67 billion in the just concluded 2019-20 fiscal year, as the Covid-19 pandemic disrupted the global supply chain and slashed the demand for most goods
The last time Bangladesh registered a drop in export earnings was in FY02 when exports fell by 7.44% at $5.99 billion.
According to Export Promotion Bureau (EPB) data released on Sunday, Bangladesh earned $33.67 billion from merchandise exports in FY20, down by 16.93%, from $40.53 billion in FY19.
The figure is $6.86 billion less than last year’s earnings and $11.82 billion or 26% less than the target of $45.5 billion set for the year.
RMG sector hit the hardest
The apparel sector, which has contributed to 83% of the total export of $33.67 billion, has been hit the hardest by the Covid-19 pandemic.
Apparel exports plunged by 18.12% to $27.95 billion, as compared to $34.13 billion in the previous fiscal year.
Of the $28.95 billion, Knitwear products fetched $13.90 billion, 17.65% less than the last fiscal year. Woven items earned $14.04 billion, registering an 18.58 % negative growth.
Why the plunge?
Lockdowns to stop the spread of coronavirus both in Bangladesh and export destinations have deeply affected the country's exports, as they hit production as well as sales at outlets of global brands.
Demand is expected to decline further in the coming months.
“The export sectors of Bangladesh have been passing through an unprecedented time in our history, as Covid-19 has swept through the entire landscape of the global economy. Exports have been a lifeline for Bangladesh economy and it is indispensable for maintaining micro and macroeconomic stability in the country,” BGMEA President Rubana Huq told Dhaka Tribune.
Work order cancellations and holds have caused the sharp decline, said Rubana.
Buyers and brands cancelled or held work orders worth at least $3.18 billion due to the pandemic.
How to turnaround the deep Dip?
“It will be very tough to return to the right track for exports until the Covid-19 pandemic is over. In entering global trade, Bangladesh has to ensure a safe environment for buyer’s representatives by bringing the infection rate lower,” Zahid Hossain, former World Bank lead economist in Bangladesh, told Dhaka Tribune.
“Where physical meetings are not possible, digital technologies for sharing designs, approving samples and holding meetings can be a solution,” he added.
The economist suggested tapping the opportunity of new products and Chinese offer of 97% duty-free market access.
Manufacturers should also focus on reducing production costs.
“As the behaviour and lifestyle of people have changed due to the Covid-19 pandemic, we should think about manufacturing present need-based products, such as personal protective equipment, to survive,” SM Khaled, managing director of Snowtex, told Dhaka Tribune.
“We should also focus on increasing efficiency and adoption of technology for reducing production cost,” said Khaled.
“It is not possible by the manufacturers alone. The government should come up with financial support to turn things around from the crisis so that factories can remain afloat,” said the exporter.
Furthermore, product diversification is crucial. Diversifying markets is important to reduce higher dependency on a few sectors, he added.
Mostafiz Uddin, managing director of Denim Expert, said: “Although the lockdown in western cities is gradually being withdrawn, people may not go to shops as many times as before, and prefer buying clothes online.
“E-commerce and online sale will emerge as a new opportunity to recover the losses during the pandemic and earn a good profit. Both the manufacturers and buyers need to avail this opportunity,” he added.
Export performance of other major sectors
Jute and jute goods earned $882.35 million, up by 8.10% from $816 million in the previous year. It was the second highest-earning sector, after RMG.
On the other hand, leather and goods slipped from its second position to third. It has seen a fall of 21.79% to $798 million in FY20 against $1.01 billion in FY19.
“Exports earning from the leather sector dipped as the demand for goods was slashed due to Covid-19,” said Md Saiful Islam, president of the Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh.
After coming out from Covid-19, exports will not jump within a shorter period as the consumers will cut expenses as the economy of the importing countries has also been hit hard by the virus, he added
Among other major sectors, agricultural products have posted a 5.16% decline to $862 against $909 million previously.
In addition, export earnings from the pharmaceuticals sector rose by 4.49% to $136 million, while plastic goods declined by 16% to $100.52 million.
The specialized textile sector saw 19.38% negative growth to $116 million, while non-leather footwear exports rose by 2.06% to $$277.13 million.
Export earnings from furniture, a newly emerging export item, posted a 2.03% rise to $76.41 million, as compared to $74.89 million in the last fiscal year.
Exports of frozen and live fish dropped by 8.84% to $456.15 million, as compared to $500.40 million in the previous year.
The home textile sector has seen a negative growth of 10.90% to $759 million, as compared to $851.72 million a year earlier.