Receipts down 5 per cent from a year earlier
Exports started the new year where it left off: jumpy.
In January, overseas shipments brought home $3.4 billion, down about 5 per cent year-on-year, as the uncertainty over the Covid-19 vaccine rollout means Western buyers are placing orders gingerly.
Coincidentally, a similar amount flew in back in January 2018, according to data from the Export Promotion Bureau.
“This was expected and nothing unusual,” said Zahid Hussain, a former lead economist of the World Bank’s Dhaka office.
If the $1.9 trillion pandemic aid package proposed by the Biden administration is implemented, it would be good for Bangladesh’s exports as about 17.7 per cent of the country’s exports are headed to the US, he said.
Garment, which typically accounts for 84 per cent of the export receipts, raked in about $2.9 billion, down about 4.7 per cent from a year earlier.
“Buyers are going very slow in placing orders for the next season, while factories are running with less capacity,” said SM Khaled, managing director of Snowtex Group, adding that it would take more or less a year-and-a-half for exports to reach the pre-Covid level.
The recovery is fully dependent on the proper reopening of the economies in the export destinations.
“However, we are hoping for better earnings in the months to come as the Western countries have started vaccination.”
If the vaccination programme turns out to be successful, demand will spring right back.
There is a possibility of recovery by June-July this year as the vaccination has already started, said Ahsan H Mansur, executive director of the Policy Research Institute.
Apparel exports will oscillate over the next few months as the EU and the US are not fully open yet, said Faruque Hassan, managing director of Giant Group.
However, the popularity of online sales gives hope to Bangladesh’s apparel exporters.
“It is keeping the demand afloat to some extent and the recovery would be better if we can grab more orders from the e-tailers,” said Hassan, also a former senior vice-president of the Bangladesh Garment Manufacturers and Exporters Association.
Meanwhile, the cutting prices and the rise in raw materials prices are other problems weighing down the exporters.
“We are suffering due to several issues such as fewer work orders, lower prices of goods and discounts on shipped products,” said Abdus Salam Murshedy, managing director of Envoy Textile.
In the given context, the buyers should follow ethical buying practice and place orders based on industry needs to help with the recovery.
In addition, the government should continue with the policy and financial support for smoother recovery, Murshedy added.
January’s receipts take the export earnings in the first seven months of fiscal 2020-21 to $22.7 billion, down about 1.1 per cent from a year earlier.
This means, $18.3 billion has to be earned from shipments in the remaining five months to meet this fiscal year’s export target of $41 billion.