Exports dropped by 16.06% in May

Bangladesh's merchandise exports saw a 16.06% year-on-year decline in May, with trade leaders pointing to a gas shortage as the main culprit among several contributing factors.

According to the latest data from the Export Promotion Bureau (EPB), the overall export earnings stood at $4.07 billion in May, which was $4.85 billion in the same month last year.

May earnings were 23.75% lower than the commerce ministry's $5.34 billion target.

In the July-May period of the current fiscal year, the country earned $51.54 billion through goods export, which is 2.01% higher than the same period of FY23. Until April of the current fiscal year, export growth was 3.93% year-on-year.

The plunge in export earnings comes at a time when the country is grappling to retain its forex reserves. Despite several measures such as taking loans from the IMF and other global lenders to tackle the forex crisis, traders continue to struggle in opening letters of credit (LCs) on time to import raw materials required for producing export goods.

The EPB data shows that aside from the ready-made garment (RMG) and agricultural sectors, other top five sectors recorded negative year-on-year earnings during the first 11 months of this financial year.

During the July-May period of FY24, the ready-made garment (RMG) sector, the primary export contributor, recorded a 2.86% year-on-year increase, reaching $43.85 billion in earnings. However, this sector saw a 17.19% year-on-year decline in May, dropping to $3.35 billion.

Exports from the agriculture sector increased by 8.2% year-on-year to $8.5 billion during the July-May period of FY24. It experienced over 37% year-on-year growth to $71.8 million in May.

Leather and leather products and home textiles exports saw 21.7% and 12.7% negative growth respectively in May FY24. The jute and jute goods also saw 12.3% year-on-year negative growth to $68.3 million in May.

Leather and leather goods experienced a negative growth of 14.17% to $961.49 million, which was $1.12 billion in the first eleven months of FY24.

Home textile marked persisting negative growth of 24.29% to $776.06 million, down from $1.02 billion in the mentioned period of last fiscal, shows the EPB data.

Engineering products also saw a negative growth of 7.52% to $479.96 million, down from $518.97 million in the same period of FY24.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President SM Mannan Kochi attributed the reduced apparel export demand to the global economic situation. 

"Every economy is facing challenges due to the war between Russia and Ukraine, as well as the tensions in the Middle East resulting from conflicts between Israel and Iran," he said. 

Kochi also noted that rising interest rates are impacting consumers' purchasing power, which will make the apparel business increasingly difficult in the near future.

Fazlee Shamim Ehsan, vice president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said government officials are finally disclosing the real situation of export earnings. 

He said most exporters have been facing setbacks for a long time, despite EPB data indicating that exports were increasing.

The export figures for May reflect the real scenario of our export earnings, Ehsan said, adding, "Usually, exports jump every month before Eid but last month was exceptional, showing negative growth mainly due to low gas supply to industries."

Industries hit hard by gas shortage

Bangladesh Textile Mills Association (BTMA) President Mohammad Ali Khokon told TBS that the gas crisis has been a persistent problem for many months now. However, the crisis intensified recently after cyclone Remal battered the country. 

None of the industries is now able to operate at full scale as a floating LNG terminal, owned by Summit, in the Bay was damaged after being hit by a broken free-floating pontoon, set adrift during the cyclone, he said