Export earnings shrink 6.25% in September

Bangladesh's export earnings saw a 6.25% negative growth year-on-year in September this year, following a more than 14% growth a month ago.

According to data from the Export Promotion Bureau (EPB) released on Sunday, the country raked in $3.9 billion last month.

However, the earnings were $4.16 billion in the same period last year (2021), said the EPB.

After a slump in July, the country's export earnings made a strong comeback in August with $3.38 billion, riding on apparel shipments, especially knitwear products.

In July and August combined, the earnings declined by 0.31% year-on-year, which was $6.87 billion in the same period last year and it remained 7.84% below the export target of $7.44 billion for the period. 

According to EPB, after 13 months of much-needed recovery of the apparel export from the pandemic and promising growth, export declined by 7.52% in September 2022 compared to the same month of 2021. 

During the first quarter of FY2022-23, apparel shipments reached $10.27 billion, which is 13.41% higher than the previous year's corresponding time. 

Talking to The Business Standard, apparel exporters said the slowdown of apparel shipments was expected from August this year as most factories have been facing a fall in work orders, which is being reflected in export earnings.

They also fear that it might continue till April-May next year.

Sparrow Group Managing Director Shovon Islam said the industry is experiencing a slowdown as retailers are stuck with too much inventory at their stores as the war-driven economic recession has badly affected clothing demand.

"We are now facing up to 20% shortage of orders for regular items and up to 6% for fashion items, which may continue for six to seven months," he told The Business Standard.

BGMEA already shared an early indication of growth slowdown from September onwards which is apparently reflected in export data for September, said its director Mohiuddin Rubel.

"The global retail market is disrupted by many challenges starting from post covid container freight and supply chain crisis, raw materials price hike, and then anticipated recession in the global economy which is halting retail sales and demand for clothing. Buyers are following cautious steps to make their inventory and supply chain optimum, so some of them are even holding back production and orders". 

He said, "Altogether it has been quite a fluid and vulnerable situation, where we have all the strengths and possibilities to grow given our sustainability and competitiveness strides, yet the global economic outlook makes it difficult to foresee something bright for the final quarter of the year 2022."

"Due to high inflation and increased bank interest rates in export destination countries, a number of buyers have been going slow in placing new orders over the last two months, and many of them are asking to hold shipments. That is why apparel shipments are facing negative growth in September, BGMEA President Faruque Hassan told TBS.

Entrepreneurs are looking for new orders from new markets, especially from Japan, Korea and India for the survival of the industry, the BGMEA president noted.

"We are approaching them to reduce dependency on the European market, and we have already had quite good growth on the market in the last fiscal year," he further added.

The industry is also investing in diversifying products and manufacturing manmade fibre-based clothes as part of making this business sustainable, he pointed out.

BKMEA Executive President Mohammad Hatem said, "Last month we saw 25% growth but this month it slipped by 9% due to global crisis, as well as, gas shortage that hampered our production severally and it reflected in the September earnings."

If we can supply proper gas for the Knitwear industry the growth will be a minimum of 25% higher, he added.

Noting that factory production in September fell at least 45% due to gas shortages, Mohammad Hatem stated that the export earnings can be doubled if the government expand allocation for LNG import by $2 billion. 

"At the end of last year cotton was touching historic highs which caused many buyers to place advance orders. If we see the data for the first half of 2022, we will see record growth for year-end-year statistics because of this reason. Then in Feb of this year with the start of the Ukraine-Russia conflict, we saw the effect of rising inflation across the world and the dampening of consumer demand. These are the main reasons for this negative growth, said Shams Mahmud, managing director of Shaha Denims Ltd.

"However, with rising tension between the US and China along with the shifting of orders from China, and Vietnam by US, South Korean and Japanese brands, this negative impact may prevail for the next couple of months, but from December we should see a positive growth trajectory in the RMG sector, he added.

Among other major sectors - leather and leather goods export saw an 8.39% growth to $104.74 million in September, which was $96.63 million during the same period last year. Jute and jute-made goods grew 5.22% to $89.04 million, while the earnings were $84.62 million in September 2021.

Meanwhile, non-leather footwear export saw over 40% growth to $50.35 million, while it was about $36 million in September last year. Agricultural products, home textiles and frozen and live fish exports reportedly saw about 30%, 18.50% and 21% respectively.

Among other major sectors - leather and leather goods export saw 8.39% growth to $104.74 million in September, which was $96.63million in the same period last year. Jute and jute-made goods grew 5.22% to $89.04 million, while the earnings were $84.62 million in September last year.

Dhaka EPZ-based leading leather exporter Austan Limited Managing Director Ibnul Wara said, "Worldwide recession caused by energy shortages, higher interest rates and supply chain disruption has made export more challenging when the situation started to look promising in a post-pandemic world. While a stronger dollar may sound like the situation is in favour of the exporters, in reality, it is hurting the pockets of the importing countries during an already difficult time. It is not surprising that the export figures are looking grim. In fact, we need to prepare ourselves for tougher times in the coming months."

"One of the ways to overcome these challenges would be to actively consider diversifying our export market. There is a huge untapped market in Australia for our RMG, leather goods, footwear and other exports. There is also the counter-seasonal advantage of Australia being in the southern hemisphere, particularly for our apparel and footwear manufacturers", he further explained.

"In addition, China holds immense opportunities for our exporters as they move towards high value, hi-tech manufacturing and start to rely on imports for products that Bangladesh specializes in. Besides Australia and China, Japan, Korea and India could be promising new markets for our exports. Bangladesh should focus on increasing export earnings by expanding market share in Asia and the Asia Pacific region," said Ibnul Wara, also the vice-president of Australia Bangladesh Chamber of Commerce and Industry (ABCCI).