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Bangladesh recorded its highest single-month export earnings in January this year and secured $5.72 billion in foreign currency with 11.45 per cent year-on-year growth, helping the country’s export sector to return to a positive trend.
Bangladesh had recorded the previous highest figure of $5.37 billion in export earnings back in December FY23.
Resurgence of the readymade garment (RMG) sector has been a crucial factor for Bangladesh’s economy, contributing $4.97 billion this January, with a year-on-year growth of 12.45 per cent, show the Export Promotion Bureau’s (EPB) monthly provisional data published on Monday.
Almost all major export earners, except apparel and agriculture products, however, are yet to return to a positive trend, and break away from the negative performance.
Due to ongoing global economic headwinds, Bangladesh’s exporters have been facing a number of persistent challenges such as order shortages. They posted 13.64 per cent, 6.05 per cent and 1.05 per cent year-on-year negative export growths in October, November and December this FY respectively.
During this period, the RMG sector perceived consecutive negative export earning growths of 13.95 per cent, 7.45 per cent and 2.35 per cent, respectively.
As a result, the first six months' export earnings growth in FY24 were hovering below 1 per cent, totaling $27.54 billion. Although the figure is 0.84 per cent higher than the same period of FY2022-23, it is 8.55 per cent lower than the commerce ministry’s $30.1 billion export target.
Thanks to the excellent year-on-year growth and record earnings in January, however, the export sector was able to secure 2.52 per cent year-on-year growth in July-January of FY24, and earned $33.26 billion.
But the figure is 7.28 per cent lower than the commerce ministry’s $35.87 billion export target.
Industry insiders said though January exports have returned to a positive trend riding on the RMG sector, due to the new cash incentive policy, Bangladesh will lose its competitiveness in the global market. This issue would make it difficult for a lot of sectors to make a comeback.
Considering the ongoing global economic instability and the country’s acute forex reserve shortage, industry leaders urged the government to reconsider the new cash incentive policy, and introduced an alternative, as Bangladesh will discontinue this support after its LDC graduation in 2026.
Speaking to The Business Post, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said, “The export sector is facing a hostile situation now, while the country is set to graduate from LDC in 2026.
“Only the apparel sector posted a positive trend in January, thanks to the effort in non-traditional markets and a 4 per cent cash incentive. But the government reduced cash incentives for all exports in every destination. The move will impact our earnings in the coming days.”
The BGMEA president added, “High inflation in western nations is going down, and brands made good sales in recent festivals. That is why buyers are placing a good number of orders. Beside, many brands are increasing product prices to adjust to the recent wage hike in the country’s apparel sector.
“These developments are helping us increase our export earnings. But the new cash incentive policy will be hampered to increase earnings.”
RMG exports jump 12.45%
The apparel sector, which contributed nearly 84 per cent to the country’s overall export earnings, was navigating through difficult times since 2022, and recorded ups and downs in terms of export growth as its key destinations were facing economic troubles and high inflation.
But in recent times, the sector’s key destinations’, especially the EU and US, the single largest region and single largest country, economy is in recovery, which helped to boost exports.
The EPB data shows that in the July-January period of FY24, RMG exports grew by 3.45 per cent to $28.36 billion, from $ 27.41 billion recorded year-over-year. Knitwear exports stood at $16.17 billion, growth increased by 8.15 per cent, and woven garments posted $12.18 billion, with growth declining by 2.20 per cent.
The single-month apparel export earnings that indicate exports in January this year stood at $4.97 billion, with growth increasing by 12.45 per cent compared year-on-year.
Based on the number of Utilisation Declarations (UD) issued by the BGMEA, which indicates the export order trend, the sector posted a 6.59 per cent year-on-year order growth in the October-December period of FY24.
During this period, the BGMEA issued 6,771 UDs to the apparel exporters. The number was 6,352 in the same period of FY2022-23.
The rising volume of orders is creating optimism among local exporters. They believe that they are in a better position in terms of receiving orders when compared to competitors, considering the ongoing global economic situation.
The orders are likely to increase in the coming days, they said.
BGMEA Director Mohiuddin Rubel pointed out, “The recent trend in trade reflects a depressing scenario of the retail businesses and economy, which might continue throughout this year.
“For Bangladesh, the positive side is that we are being able to gradually diversify our products and move toward sophisticated items, which is reflected in the growth.”
Non-RMG earnings
According to the latest EPB data, the agriculture and fish sectors — which are considered primary commodities — posted a 1.98 per cent year-on-year negative earnings growth in the first seven months of FY24, and earned $846.91 million.
Of the total, frozen and live fish sector earnings dropped by 14.9 per cent to $291.65 million, and agricultural goods sector earnings rose by 4.44 per cent to $548 million.
Meanwhile, the leather and leather goods sector continued negative earnings growth, and earned $733 million during this period, which is 14.33 per cent lower compared year-on-year.
Another potential sector, jute and jute goods also followed the negative earnings trend, and income dipped by 6.85 per cent to $548 million when compared year-on-year.
In the first half of FY24, home textile sector earnings dropped by 34.37 per cent to $693 million year-on-year. However, earnings from the non-leather footwear sector rose by 2.57 per cent to $289 million.
Speaking to The Business Post, Bangladesh Employers’ Federation Director Fazlee Shamim Ehsan said, “Energy shortage, low order and low product price made us suffer throughout 2023, and these crises are still ongoing.
“Liquidity crisis in banks and a hiked interest rate have also hindered uninterrupted private investment in the sector. Political instability and relief from the bureaucratic tangle is most important when it comes to doing business smoothly.”
