Exports bounce back after two months

Bangladesh’s export sector returned to a positive trend in May, after two consecutive months of negative growth, which helped to achieve $50 billion in earnings in the first 11 months of FY2022-23 amid the ongoing global economic crisis.

However, apart from readymade garments and leather and leather products, most of the major export earnings sectors are still in the negative trend, compared to this May and the first 11 months of FY23.

According to the Export Promotion Bureau’s (EPB) provisional data, released on Sunday, the country earned $4.85 billion in May, which is nearly $1 billion higher compared to the same month of FY2021-22.

It also saw 26.61 per cent year-on-year growth, even though the figure is 5.29 per cent lower than the May target.

During the first 11 months of FY23, the export sector earned $50.53 billion, posting a 7.11 per cent year-on-year growth. The figure was $47.17 billion in the same period of FY22. The government had set a target of $52.43 billion for July-May of FY23, according to EPB.

Apparel, which holds the lion’s share of the export sector, also returned to a positive earnings trend last month, helping the export sector to make a comeback.

The news came at a time when the country’s foreign exchange reserve is down to $29.91 billion, which is pushing up the foreign currency demand day by day. Due to the reserve shortage, importers are facing trouble opening letters of credit (LCs).

Experts have said that the latest development is good news for the country, but it’s uncertain how long the trend will continue. Exporters, however, said that they are still in trouble and the next two months’ earnings will likely be negative as buyers are not placing enough orders.

Commenting on the matter, Research and Policy Integration for Development Chairman Mohammad Abdur Razzaque told The Business Post, “It’s good news amid the economic crisis. But it’s too early to say that the export sector has turned around.”

“It is true that our export sector, especially apparel, is performing excellently in the non-traditional markets. But the US market, which is Bangladesh’s largest export destination, is still volatile, and we are performing there in the negative,” he said.

He said, “Other Western markets are also still in trouble due to the economic crisis. So, we have to create more awareness about the new markets, especially India, Japan, South Korea, Australia, Brazil and South Africa, as there is a huge potentiality to increase export earnings.”

Apparel sector shines again

The RMG sector, which is responsible for nearly 84.37 per cent of the total export earnings, saw negative growth in March and April in FY23. It also posted negative earnings in September last year.

That recent negative growth and a low number of export orders for the next seasons — both caused by the global economic crisis and soaring inflation in Europe and the US — have left apparel exporters worried.

However, in May this year, the sector posted a 28.16 per cent year-on-year growth and earned $4.05 billion, which was $3.16 billion in the same months of last year, according to EPB data.

It showed that the apparel sector earnings were up by 10.67 per cent to $42.63 billion in the first 11 months of FY23, from $38.52 billion year-on-year. The figure was also 0.76 per cent higher than the export target.

During this period, knitwear sector earnings were up by 8.97 per cent to $20.97 billion and the woven sector earnings by 9.24 per cent to $17.61 billion year-on-year.

Bangladesh Garment Manufacturers and Exporters Association President Faruque Hassan said that May-July is the peak season for winter clothes export and the manufacturers received a good number of orders from buyers as the brands were able to release their stocks during the long period of winter in the western countries.

He said, “We exported a low volume of clothes in April due to the Eid-ul Fitr holidays and the rest of the goods were exported in May. Last year, the Eid-ul-Fitr holidays were in May, and because of that we exported a low quantity of goods and sent the rest in June. Due to this trend, export growth and earnings appeared high in May this year.”

“Without any miracle, the apparel sector’s export earnings will decline in June and July as most of the factories are continuing operations with orders lower than their capacity,” he added.

Leather sector back on track

During the first nine months of FY23, leather and leather products were able to maintain a positive trend despite the global economic crisis, but the sector’s export earnings took a dive in April this year.

But in May, the earnings jumped by $10 million year-on-year, which helped the sector to return to the positive trend, as per EPB data.

The data showed that the sector earned $114 million in May, which was $104 million in the same month of FY22.

Also, the sector posted a year-on-year growth of 0.42 per cent to $1.12 billion in the first 11 months of FY23, which was $1.12 billion in the same period of FY22.

Jute, home textile still in trouble

Meanwhile, two emerging export earning segments — jute and jute goods and home textile — have failed to return to the positive earnings trend.

EPB data showed that the jute and jute goods sector earned $77.78 million this May, which was $88.54 million in May FY22.

In the first 11 months of FY23, the sector’s earnings dropped by 19.57 per cent to $849 million year-on-year, which was $1.06 billion in July-May of FY22.

The home textile sector’s earnings dropped by 30.14 per cent to $1.02 billion in the first 11 months of FY23, which was $1.47 billion in the same period of FY22. The sector earned 84.18 million this May, which was $135.77 million in the same month of FY22.

Bangladesh Jute Goods Exporters Association Director Esrat Jahan Chowdhury said that the purchasing power of the consumers in the export destinations has fallen due to high inflation and the global economic crisis.

“Buyers have been placing a low number of orders since the middle of 2022 and the price they are offering is not reasonable. That is why we failed to retain export growth, and there is even no chance to recover this year.

“We are seeking the government’s support to tackle the crisis, especially the withdrawal of anti-dumping duty that has been imposed by the Indian government,” said Esrat, also the chief executive officer of Tulika Eco.