What underwear index indicates about the health of our economy

With slump in major economic indicators like import and export data, and the private sector credit growth raising fears of hard times in coming days, the men's underwear index also gives an early warning of economic slowdown.

Sales of innerwear for low and middle-income males drop significantly year-on-year, according to local manufacturers and retailers in Dhaka and Narayanganj. This demonstrates the relevance of the men's underwear index.

Conceived by former US Federal Reserve Board chairman Alan Greenspan in the late 1970s, the index suggests that declines in the sale of men's underwear indicate a poor overall state of the economy, while upswing reflects the opposite.

Greenspan believed when times were tough men would stop replacing worn-out underwear which no one could see before cutting other purchases.

The forecast by the underwear index came true in India.

The decline in the sale of male's innerwear fell a few months before the country's economic slowdown was exposed. Indian media were reporting on the fall of sales last year. India is now experiencing worse economic slowdown in decades.

Manufacturers and retailers of male's innerwear in the capital and its adjacent district, Narayanganj, complained about the drop of sales.

Mahboob and Alamgir Khan, who jointly run a shop on the footpath in front of the Mouchak tower in the capital, last month said their daily sale of men's underwear has come down to 10-15 pieces per day from 20-25 in the same season a year ago.

The same number of people, they said, are passing their street shop.

"People now bargain too much, and buy less," said Mahboob, adding, "Our price did not increase though."

The two partners at their shop sell local underwear at a price around Tk70-100, the imported Chinese ones and stock lot from export oriented factories costs Tk20-30 higher. But their price usually does not exceed Tk200.

Abdullah, a salesman at the well organised hosiery Dhanmondi Fashion, said, "People who tend to buy underwear from within their reach seems to not like us anymore. Ultimately, they escape the purchase.

"We are trying with imported Chinese ones alongside local market products and some from exporters' stock lot. But sale drop is still here."

The last four-five months were worse for them compared to both the previous months and the same period a year ago, he said.

A year-on-year sale drop in the last few weeks will not be less than 20 percent, estimates Abdullah.

Some other shops nearby also complained about sales drop.

On the other hand, a few hundred yards ahead, at the New Elephant Road, the scenario is a bit different.

The roadside malls are full of various apparel brands, which are mainly the destinations of comparatively higher income middle class people.

Gentle Park, a mid-range premium local apparel brand, is not suffering any lack of demand for their male underwear at the Elephant Road outlets.

Their daily sale is hovering around 8-10 pieces, slightly higher than the previous year.

Well-off middle class customers do not hesitate to buy a few pieces of Gentle Park branded underwear at a rate above Tk450, said Sabbir Mahmud, the outlet manager at a Gentle Park on the New Elephant Road.

Countrywide suppliers of male underwear also indicate that they are facing a slow demand.

Chinese imported ones are grabbing the market that is pushing the local small manufacturers to shut factories.

In Noyamati area of Narayanganj on the outskirts of Dhaka, there had been over a thousand small underwear factories. The number has reduced in the last three years, mainly because of irresponsible imports, said Abdul Hai, owner of Dristi Hosiery. He is a director of the Bangladesh Hosiery Association.

But this year something is additionally wrong for underwear sale is slow regardless its origin.

Ripon Biswas, owner of Kalyan Hosiery, said the sale drop is almost one-third this season.

His small factory stopped underwear manufacturering but his wholesale is running in Narayanganj. His daily wholesale came down from 70 dozen to below 50 dozen a day.

The decline in sale of male's underwear speaks about the health of an economy at the micro level.

A slump in all major macroeconomic indicators in the last eight months in the current fiscal year has already raised fear of hard times in the coming days.

Just three months back, Fitch, a global rating agency, projected that Bangladesh's economic growth will roll back to 7.5 percent in the current fiscal year.

The country achieved record 8.15 percent growth in the last fiscal year. And it has set a target of 8.20 percent growth in the current fiscal year.

Talking to this newspaper two days ago, Prof Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue, said the economy is slowing down in recent times and it can have a knock-on impact on employment, growth and per-person income.

Sheikh Fazle Fahim, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), attributed the recent economic slowdown on some internal and external reasons.

The FBCCI president said, "It is temporary as our financial sector is going through some restructuring processes."

He hoped the economy will bounce back in the second quarter.