Exports to US down 2.29% as crisis lingers

Bangladesh failed to retain export growth in the US market during the first seven months of FY23 due to the slow growth there caused by the ongoing global economic crisis.

The Export Promotion Bureau (EPB) data shows Bangladesh earned $5.72 billion in the July-January period of FY23 from the US market, down from $5.85 billion in the same period of the previous fiscal year, registering a 2.29 per cent drop.

Also, during this period, the share of Bangladesh’s exports to the US declined to 17.63 per cent from 19.81 per cent year-on-year.

In FY22, the US became a $10 billion export destination for Bangladesh for the first time, with exports amounting to $10.41 billion, posting a 49.38 per cent growth year-on-year, according to the EPB.

Industry insiders said buyers are placing fewer orders. Many are even cancelling orders as well as deferring shipments and payments due to the crisis.

They said orders have declined by up to 10 per cent year-on-year, with brands witnessing a decline in sales. They further said brands informed them that the situation would not improve in this fiscal year.

The 2022 fourth-quarter gross domestic product (GDP) growth in the US was 2.9 per cent, slightly slower than 3.2 per cent in the previous quarter, CNBC reported.

Also, though the 4th quarter of 2021 registered a 7 per cent growth, the first two quarters of 2022 saw negative growth, which matched a commonly held definition of recession.

Sparrow Group Managing Director Shovon Islam said the US economy had slowed down significantly in the last one year amid high inflation and energy prices.

“We are expecting further slowdown, and recovery may not begin until the first quarter or the middle of 2024,” he said.

Drop in apparel orders

The EPB data shows the readymade garment sector, which fetches the lion’s share of export proceeds, saw earnings fall by 2 per cent year-on-year to $5 billion in the first seven months of FY23.

Industry insiders said brands have huge unsold stocks as consumer spending has fallen due to high inflation in the US market.

Nipa Group Managing Director Md Khosru Chowdhury said one of his American buyers had cancelled orders for seven lakh pieces of clothes worth $2.4 million last month while another was yet to clear payments of $7 million.

“The market situation in the US and Europe is very bad. Our US orders have dropped by 30 per cent. However, buyers said they would gradually increase orders after April while the situation will improve after this fiscal year.”

Sparrow’s Shovon said Bangladesh’s garment sector will be in a tough spot in the next six to nine months.

Home textile earnings dip

The EPB data shows export earnings in the home textile sector fell to $94 million in the July-January period of FY23 from $173 million in the same period of the previous financial year.

Home textile is the second largest export sector in Bangladesh. Industry insiders said the global home textile market is not good due to the economic crisis.

Amid this, the countrywide gas and electricity crisis has cut textile production by up to 40 per cent, which is why manufacturers could not accept orders.

“I think orders will bounce back from next month. Our gas crisis is easing gradually, and the present situation is better than what we faced three to four months ago,” Noman Group Management Coordinator Mosleah Uddin Babu said.

Other sectors

According to the EPB, footwear and leather goods exports saw positive growth in the first seven months of the current fiscal year.

Its data shows the country earned $182 million from the US market through footwear exports during this period, slightly up from $181 million in the same period of FY22. On the other hand, the leather goods sector’s earnings rose to $52 million year-on-year from $50 million.

But during this period, fish and crustacean export earnings plummeted to $19 million year-on-year from $33 million. The furniture sector earned $14 million, down from $31 million in the same period of FY22.

The pharmaceutical sector’s earnings grew to $9.65 million year-on-year from $8 million. Besides, feather, artificial flower, and human hair export earnings rose to $58 million year-on-year from $38 million, the EPB data shows.