Monday, April 29, 2024
After a depressive FY24 October-December quarter in terms of merchandise export earnings, the performance of January and February has reignited hope of boosting the country’s overall export growth, amid global and domestic economic headwinds.
Export Promotion Bureau (EPB) data shows that Bangladesh posted a year-on-year (YoY) export earnings growth of 3.71 per cent to $38.45 billion in the July-February period of FY24.
The feat was achieved thanks to the YoY export growth of 11.45 per cent to $5.72 billion and 12.04 per cent to $5.19 billion in January and February respectively.
In comparison, the growth was just 0.84 per cent to $27.54 billion in the July-December of FY24, as Bangladesh recorded 13.64 per cent, 6.05 per cent and 1.05 per cent YoY negative export growths in October, November and December respectively.
In the first eight months of this FY, the manufacturing commodities sector was able to retain a 3.86 per cent YoY growth, while the agricultural products and fish, commonly known as primary commodities, performed 2.25 per cent YoY negative.
Except for readymade garments and non-leather footwear, almost all major manufacturing products failed to retain growth in the July-February period of this FY.
It should be noted that the export earnings growth is now on an upward trend thanks to the excellent performance of the apparel sector, and it has contributed 85.44 per cent to the overall $38.45 billion in exports.
Experts said this development will help Bangladesh tackle the ongoing forex reserves shortage.
The poor performance from the non-RMG sector is a pressing issue for the country, as Bangladesh will graduate from LDC status in 2026, and export diversification is most important to avoid any obstacles in the post-graduation period.
Business said government policy support, and uninterrupted gas and energy supply is crucial to turning around all sectors from the trend of negative export earnings growth to ensure a smooth LDC graduation.
Speaking to The Business Post, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan, “Last one and half years were tougher for us, and we posted a YoY negative export earnings for a significant amount of single months.
“However, we secured a remarkable YoY growth in January and February, which is good news for us, as well as Bangladesh. The country is currently facing severe forex reserve shortages, and we implemented a new wage structure in December last year.”
RMG growth up 4.77%
According to the EPB, the RMG sector witnessed a 4.77 per cent YoY growth in the first eight months of this FY and earned $32.86 billion. The figure, however, is 5.22 per cent lower than the commerce ministry’s $34.66 billion export target for the period.
Although the knitwear items were able to retain 8.98 per cent growth in the July-February period, and earned $18.59 billion, earnings from woven items dropped by 0.26 per cent to $14.26 billion YoY.
Industry insiders said although the ongoing global economic crisis struck almost all countries, western nations are the key sufferers. Their inflation rate had risen to double digits, and the EU’s largest economy, Germany, also Bangladesh’s second largest export destination, fell into a mild recession.
To tackle this crisis, their authorities increased interest rates. As a result, consumers' purchasing power declined, and brands retained a huge stockpile of products in their warehouses.
As a result, the sector perceived negative export earning growths of 13.95 per cent, 7.45 per cent and 2.35 per cent in October-December of FY24 respectively.
In recent time, however, these countries’ inflation is coming down to a tolerable level and brands secured big sales in the recent festivals. The pressure of excessive inventory at buyers' end has eased off.
The buyers are now knocking at Bangladesh’s exporters' doors, and already, the order trend is on the rise.
The BGMEA president said, “I believe that good days are close at hand, and most probably, we will witness a better growth than the last quarter of this FY.
“We now need an uninterrupted gas and electricity supply, as well as policy stability, to cash in on this opportunity, and the government should ensure these.”
Non-RMG earnings
According to the latest EPB data, the agriculture and fish sectors — which are considered primary commodities — posted a 2.25 per cent year-on-year negative earnings growth in the first eight months of FY24, and earned $920.97 million.
Of the total, frozen and live fish sector earnings dropped by 14.1 per cent to $273.97 million, and agricultural goods sector earnings rose by 3.49 per cent to $636.51 million.
Meanwhile, the leather and leather goods sector continued negative earnings growth, and earned $712.68 million during this period, which is 14.38 per cent lower compared year-on-year.
Another potential sector, jute and jute goods also followed the negative earnings trend, and income dipped by 4.68 per cent to $581.55 million when compared year-on-year.
In the first eight months of FY24, home textile sector earnings dropped by 29.94 per cent to $539 million year-on-year. However, earnings from the non-leather footwear sector rose by 8.7 per cent to $341 million.
Tajin Leather Corporation Managing Director Md Ashikur Rahman said, “Leather and leather goods could be one of the key export earners for Bangladesh, as 95 per cent raw materials used by the industry are available in Bangladesh.
“But due to a lack of LWG certification, mainly because of environmental issues, the sector is shrinking, but no one cares about this. This is unfortunate for the sector’s entrepreneurs as well as the country.”
