Export earnings slip 7.85% in October

Bangladesh’s export earnings slipped 7.85 per cent in October compared to the same period year-on-year, a phenomenon that has continued for the second consecutive month. This indicator is slipping amid an ongoing shortage of the foreign exchange reserves.

According to the Export Promotion Bureau’s (EPB) monthly probationary data released on Wednesday, export earnings in October dropped by 7.85 per cent to $4.36 billion when compared year-on-year.

In September, Bangladesh’s export earnings had dropped by 6.25 per cent to $3.9 billion, compared to the same month last year. It should be noted that the remittance inflow – another key source foreign currency – dipped by 7.35 per cent to $1.52 billion in October year-on-year.

Bangladesh was able to maintain export growth in the first four months of FY23 by 7.01 per cent, earning $16.85 billion. The country however failed to meet the export target by 3.25 per cent during this period.

Nearly all key sectors have failed to meet the export target of the July-October 2022 period, an analysis of the EPB data shows. Industry insiders and economists say the ongoing Russia-Ukraine war and record high inflation in destination countries are main reasons for negative export performance.

Former advisor of the caretaker government and noted economist AB Mirza Azizul Islam said, “We are facing a big challenge. Two major sources of foreign currencies are in the negative, which is severely impacting our macro economy.

“To tackle this crisis, the government should introduce short and long term policies, such as more product diversification and expansion to newer markets.”

According to the EPB data, the apparel sector contributed 82.79 per cent of the $16.85 billion earnings in the first four months of FY23, and the sector earned $13.95 billion with 10.55 per cent growth. The sector however failed to meet the export target by 0.74 per cent.

On the issue, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said, “As buyers are reducing export orders and deferring shipments, it has become difficult to meet export targets. But we are trying to retain positive growth.”

BGMEA Director Mohiuddin Rubel said, “As an entrepreneur in the industry, I do not see any positive outlook in terms of orders and growth in coming months, as the retail market worldwide is struggling, and buyers are being cautious in managing new orders and inventory.”

Expert earnings of the home textile industry – another key sector – rose by 5.18 per cent to $434 million in the first four months of FY23, but the figure is 26.99 per cent less than the export target.

Leather and leather goods sector earnings increased by 17.42 per cent to $428 million, which is 0.93 per cent less than its export target.

Industry insiders say they cannot run uninterrupted production due to the ongoing energy crisis, which is severely affecting their export earnings. Besides, the global economic crisis and Russia-Ukraine war are also reasons behind the slow export performance.

“Uninterrupted power and energy supply is very important for maintaining export growth, and the government should ensure such crucial utilities as much as possible,” Tajin Leather Corporation’s Managing Director Ashikur Rahman told The Business Post.

Jute and jute goods sector has failed to retain its export growth as well in the first four months of FY23. The sector’s earnings dropped by 1.96 per cent to $326 million during the period, which is 15.08 per cent lower than the target.

A number of industry insiders are concerned that it will be difficult for them to retain positive growth as most of raw jute is not of good quality, and buyers are also reducing the number of work orders.

Bangladesh Jute Goods Exporters Association Director Esrat Jahan Chowdhury said, “We are facing a severe shortage of orders after Russia invaded Ukraine. Buyers are offering us low prices for the few orders that are actually coming our way.

“But the price of standard quality raw jute is too high in the local market, which in turn is pushing up production costs significantly.”

As per the EPB data, exports of frozen and live fish are down by 23.78 per cent to $171 million in the July-October this year. During this period, agriculture product sector earnings dropped by 23.81 per cent to $353 million.

Pharmaceutical’s export earnings are down by 23.36 per cent to $56 million, but plastic sector earnings rose by 35.34 per cent to $62 million during the period, according to the EPB.