Export growth slows down

Bangladesh’s export growth slowed down to 23.24 per cent in May as global buyers placed fewer work orders and held back ongoing shipments due to slower demands caused by the soaring inflation in the US and European Union (EU).

According to Export Promotion Bureau (EPB) data, the country’s export earnings in May posted a 23.24 per cent growth to $3.83 billion, against $3.10 billion in the same period of FY2020-21.

The earnings are also the lowest in nine months since August last year when it was $3.38 billion.

In April, export growth was 51.18 per cent, followed by 54.82 per cent in March, 34.54 per cent in February, 41.13 per cent in January, 31.25 per cent in December 2021, and 60.37 in November.

Meanwhile, Bangladesh earned $47.17 billion during the July-May period of FY2021-22, up by 34 per cent from $35.18 billion in the same period of FY21.

The largest contributor to the national exports, the readymade garment sector earned the highest ever $38.52 billion during July-May of FY22, up by 34.87 per cent from $28.56 billion at the same time last fiscal.

Knitwear products posted a 36.61 per cent growth to $210.98 billion, which was $15.36 billion in the same period of FY21.

Woven products also earned $17.53 billion, up by 32.85 per cent from $13.19 billion in the same period of FY21.

Why growth slowed down?

“The EU is going through a silent recession, which is keeping consumers from spending more on clothing items. Demands for such goods have declined because people are focusing on meeting essential needs,” Shahidullah Azim, the vice president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told The Business Post.

With demands declining due to rising inflation in the US and EU, many global brands, including H&M and Zara, have taken up the “go-slow policy” in placing fresh work orders and halting ongoing shipments. These also slowed down growth in export earnings, he said.

“It is difficult to say which direction exports will take since it is depending on the Russia-Ukraine war. If it escalates further, the global supply chain will worsen and our exports will suffer,” Azim added.

Zahid Hussain, the former lead economist of the World Bank’s Dhaka office, told The Business Post, “After the Covid-19 situation came under control, pent-up demand led to the more demand for clothing items among the consumers for a while. It’s possible that consumers have now returned to their normal buying habit and that contributed to the slower growth in exports earnings.”

“It indicates that export earnings are becoming stable since the high export growth rates we saw over the past few months were not normal, which was caused by unusual buying after the Covid situation improved,” said the economist.

“However, we’ll have to see how much the growth rate declines or where it’s going to end up. If it slides abnormally, it will be a major concern for the exporters,” he added.

Zahid also concurred that the rising inflation in the US and EU, which is a threat to Bangladesh, could have played a role in the slower export growth.

Another reason behind the slower growth is the severe supply chain disruption caused by the Russia-Ukraine war, which also negatively impacted global economic growth, he said, adding “China’s zero-tolerance Covid-19 policy also played a role.”

Performance of other sectors

During the July-May period of FY22, jute goods fetched $1.05 billion, down by 3.19 per cent from $1.08 billion in the same period of FY21. However, raw jute export earnings rose by 50.97 per cent to $191 million.

On the other hand, leather and leather goods posted a 31.85 per cent growth to $1.11 billion, which was $846 million at the same time in FY21.

However, Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh president Md Saiful Islam said,
“Our export earnings dipped because the demand was slashed because of Covid.”

After coming out of the pandemic, exports did not increase because consumers in the importing countries cut expenses after their economy was also hit hard, he added.

Among the other major sectors, agricultural products posted a 21.51 per cent growth to $1.10 billion during July-May of FY22, against $906 million in the same period of FY21.

Earnings from frozen and live fish exports increased by 14 per cent to $492 million, compared to $431 million last year.

The home textile sector has seen a robust growth of 41.3 per cent to $1.46 billion, which was $1 billion in the same period of FY21.

The pharmaceuticals sector, an emerging foreign currency earner, recorded 20.39 per cent export growth to $175 million, while plastic goods’ earnings increased by 36.84 per cent to $143 million.

The specialized textile sector saw 143 per cent growth by earning $294 million, while non-leather footwear exports rose by 33.85 per cent to $408 million.

Export earnings from furniture products posted a 37.52 per cent rise to $101.50 million, compared to $74 million in the same period of FY21.   

Bicycle exports also recorded a 30.20 per cent rise to $157 million against last year’s $120 million.