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Bangladesh’s export earnings dropped to $3.76 billion this October, down by 13.64 per cent year-on-year, the lowest since August 2021.
In August 2021, Bangladesh was facing Covid-19 crisis along with the world and earned $3.38 billion by exporting goods.
It meant that the country faced such a situation after 25 months, according to the data published by Export Promotion Bureau (EPB) at a time when Bangladesh is facing economic and foreign currency crises.
The apparel sector, the country’s key earnings basket, also failed to retain the growth and its earnings dropped by 13.93 per cent to $3.16 billion in October year-on-year. In October of FY23, the sector earned $3.68 billion through exports.
Industry insiders said that tougher days are waiting for them as well as for the country as the political situation here was getting worse and ongoing workers’ unrest forced them to shut nearly 500 apparel factories.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan told The Business Post, “While the world is facing severe economic crisis, the ongoing Israel-Hamas war has added further fuel.”
“While we are trying to recover from the ongoing economic crisis, the country’s political situation has become volatile. The situation put us into hot water, and will impact the country’s export earnings.”
“We believe that everyone has right to do politics and exercise voting rights in the polls. But all programmes should be held peacefully, considering the country’s interest. I urge all political leaders to sit in the table to resolve the crisis,” he added.
The central bank data shows that country has $20.66 billion worth of forex reserves as per the International Monetary Fund (IMF) method. But the figure is lower considering net reserves though the central bank does not disclose the figure.
Due to a shortage of forex reserves, commercial banks are facing severe crisis to open letters of credit (LCs), and the Bangladesh Bank is regularly selling USD to the banks from reserves to meet their demand.
As the country is facing foreign currency shortage, the USD rate is appreciating regularly and this rate stood at Tk 110.5 for export, according to the central bank October 2 data.
Considering the July-October of fiscal year 2023-24, however, the country was able to retain 3.52 per cent year-on-year growth, and earned worth $17.45 billion. But the figure is 9.31 per cent lower than the commerce ministry’s export target for the period.
Apparel sector
According to the EPB, the apparel sector holds above 84 per cent of total export earnings, and except the sector, all major export baskets were performing negative since last fiscal year, though the RMG sector also witnessed negative growth sometimes.
But in October this year, the sector earned $3.16 billion, down by 13.93 per cent growth compared to the same month of FY23.
The result came at a time when the apparel sector’s workers were staging demonstrations demanding Tk 23,000 as minimum monthly salary, and nearly 500 factories were shut as protests turned violent.
Though the apparel owners previously proposed Tk 10,400 as minimum monthly salary to the RMG wage board, instead of existing Tk 8,000 and they decided to revise the proposal, thousands of RMG workers are yet to join work.
BGMEA confirmed that their buyers are yet to cancel any orders but they hold new orders placement procedure and are observing the situation. Exporters fear that buyers are likely to shift their orders to other countries if the country’s political and RMG sector environment will not change immediately.
Regarding the issue, BGMEA held a meeting with the leading buyers’ representatives virtually on Thursday.
In the first four months of FY24, the apparel sector earned $14.78 billion, which was 5.95 per cent higher than the same period of FY23.
Leather sector’s exports drop
Though the leather and leather goods sector performed little bit well in the July-April of FY23, earnings from the sector gradually declined since May this year.
EPB data shows that earnings from the leather and leather goods sector dropped by 24.1 per cent to $325 million in the July-October period of FY24. The figure was $428 million in the same period of last fiscal year.
Industry insiders said that leather sector is dependent on Asian market and the buyers reduced orders due to the ongoing global economic crisis. Though the country is exporting leather goods to the western market, their economy is also in the doldrums.
“There is no chance to recover the situation in the coming days,” said Md Ashikur Rahman, Managing Director of Tajin Leather Corporation.
Jute sector performs 11.26% negative
Since early of FY22, the jute and jute goods sector started to perform negative export earnings, and it’s still continuing. As per the EPB data, the sector earned $290 million in the first four months of FY24, and posted an 11.26 per cent year-on-year negative earnings.
Bangladesh Jute Goods Exporters Association Director Esrat Jahan Tulika said, “Most of the exporters are facing orders shortage due to the global economic crisis. This also impacted the local market, and raw jute price drop drastically.”
Home textile sector struggling
One of the major potential export sectors, home textile, failed to turn around, and its earnings dropped by 44.99 per cent to $238 million year-on-year in the July-October FY24.
In the same period of last FY, the figure was $434 million.
Exporters said, until the western economy turns around, the sector would not recover as the buyers are placing limited orders.
