The contraction is the highest in the history of Bangladesh’s apparel export
The country’s apparel exports declined by 18.45% to $27.83 billion in the just-concluded fiscal year as the Covid-19 pandemic took a heavy toll on global clothing demand and supply chain, according to the provisional data of the National Board of Revenue.
The contraction is the highest in the history of Bangladesh’s apparel export, as the biggest shipment shrink of 5.68% took place back in the 2001-02 fiscal year.
In the fiscal year 2001-02, the apparel sector declined 5.68%, when its total export earnings were only $4.58 billion.
For the last FY20, the government had set a target to earn $38.20 billion from clothing export. The earnings from the sector were $34.13 billion in the 2018-19 fiscal year.
The Export Promotion Bureau (EPB) is going to release the overall export performance data for the just-concluded fiscal year next week, a senior trade official at the Bureau told Dhaka Tribune.
“We are now verifying the NBR data. It seems all right,” an EPB official said.
Why the plunge
Lockdowns and shutdown enforced both in Bangladesh and export destinations to defeat the coronavirus pandemic have deeply affected the country's exports as it has impacted the production as well as sales in the global brands’ outlets.
“The country’s export-oriented sector has been passing through an unprecedented time in our history as Covid-19 has swept through the entire landscape of the global economy. Export has been a lifeline for Bangladesh economy and indispensable to maintaining micro and macroeconomic stability in the country, hence such a devastating scenario is alarming,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Rubana Huq told Dhaka Tribune.
The compound annual growth rate of the country’s exports during the last 5 years had been 6.86%, and the rate had been even higher for the last 10 years, 10.70%, Rubana added.
Global buyers, retailers and brands had cancelled or held work orders totalling $3.18 billion due to the Covid-19 pandemic, she said.
“We lost 4.8 billion worth of exports just in three months, April-June 2020. This showed the severity of the Covid’s impact on the industry,” she added.
“New seasons are coming but travel restrictions have not been withdrawn in many countries. So, like before, physical meetings will not be possible. Therefore, both manufacturers and buyers have to use digital technologies for sharing designs, approving samples, doing b2b meetings etc,” Mostafiz Uddin, Managing Director of Denim Expert said.
Though the lockdown in western cities is gradually being withdrawn, people might not go to shops as many times as before, rather consumers would prefer buying clothes online, maintained Mostafiz.
Hence, e-commerce and online sale would emerge as a new opportunity to recover the loss that had been made during the pandemic and earn a good profit, added Mostafiz.
“It will take time to reopen the economy and demands for clothing items to pick up. So, the manufacturers have to concentrate on new products such as personal protective equipment and meditext,” Dr Zahid Hossain, former World Bank lead economist in Bangladesh said.
He also urged to take advantage of the duty-free market access in China and as well to focus on non-traditional markets.
Free fall in exports to continue
As the Covid pandemic exists, and signs of economic recovery are yet to become visible, the free fall in exports to continue as global trade and consumption forecast to decline sharply.
In addition, UNCTAD estimated a decline by 27% in the second quarter of 2020 in trade in many developing countries due to the “unprecedented effects of the pandemic.
As per the World Trade Organization (WTO) forecast, the global merchandise trade to decline 13-32% in 2020 due to the Covid-19 pandemic.
As per the global projections and forecasts by industry insiders, currently the factories have orders equivalent to 55% of their capacities on average which is expected to pick up a bit by the year end by 70% of the capacity by December 2020,” said Faisal Samad, senior vice president of BGMEA.
A long term prediction may not be pragmatic at this volatile situation, yet we can hope that we will be as close as 80% of our regular exports toward middle of 2021, he added fearing continuation of down trend in exports.