April exports dip below $4b, hitting six-month low, remittance rises to $2.04b

TBS Illustration

Latest data reveals a contrasting trend in the external front. Remittance recouped previous month's decline in April. But monthly exports slid far below $5 billion and clocked the lowest in six months, smashing the hope for some respite in external balance expected from Eid-boosted remittance recovery.

Exports plummeted to $3.92 billion in April, more than a billion dollars less from March earnings and even lower from the amount fetched in the same month last year, the Export Promotion Bureau data shows.

Export sector leaders said their sales growth slowed in two major markets, the European Union and the USA. Shrinking export prices and energy shortages causing shipment delays are also among the reasons for steep fall in export earnings.

India also saw drops in overall exports, driven by decline in the US market in its last fiscal year, which ended in March, due to tighter monetary policy dampening demand in advanced economies as well as tensions on the Red Sea route.

After a slide in March, monthly remittance returned to the $2 billion zone in April on the back of a surge in inflows for Eid celebrations and better rates for dollars, bankers said.

Ahsan H Mansur, executive director at the Policy Research Institute (PRI), told The Business Standard that decline in exports and lower-than-expected growth in remittance might not put the balance of payment situation in a better state. "High interest rates are a major strain for our BoP now," he said.

Since interest is higher on taka than on dollar, there may be a trend among non-resident Bangladeshis for sending more dollars to the country, the economist believes. Yet the remittance inflow did not show that much growth over the past few months and exports growth slowed, meaning that BoP would be in stress, he cautioned.

April remittance gets Eid boost

The flow of inward remittances rose to $2.04 billion in April – the month of Eid-ul-Fitr celebrations.

TBS Illustration

The amount is 21.3% higher than the same month in the previous year, Bangladesh Bank data shows.

In March, remittances dipped below the $2 billion mark, which bankers attributed to lower rate of dollars in banks.

For most days in March, the exchange rate of the US dollar declined to Tk112.50-113 from its February peak of Tk120-122. 

However, the rate went up by Tk3-4 per dollar in April, reaching Tk116-Tk117. Expatriates are getting better rates and encouraged to send more remittances home, said the managing director of a private bank.

Some bankers pointed to a peak in remittance inflow in the last four days of April, with some banks performing well, taking the month's total to over $2 billion.

Private commercial banks channelled $1.73 billion in April, a little over 2% increase from March. As always, the Islami Bank topped the list of all banks, channelling $541 million home.

State-owned commercial and specialised banks brought home $308 million last month, with Krishi Bank posting 176% rise over March.

Some private banks performed unexpectedly well. Listed as a weak bank for merger, National Bank fetched $45 million in the last four days of April, raising the month's total to $110 million. Social Islami Bank also performed well. It got 38% of its full April remittances only in the last four days of the month.

Economist Ahsan H Mansur said some agencies in Dubai collect remittances from various Middle Eastern points and sell that to banks. "The banks that offer better exchange rates get higher remittances," he said, explaining why some banks saw a sudden rise in inflow.

Exports hit six-month low

Bangladesh exported goods worth $3.92 billion in April, the lowest in six months and also a 0.99% decrease year-on-year, data released by the Export Promotion Bureau (EPB) on Thursday shows.

Export receipts had maintained more than $5 billion since December till March, providing relief to the country's dwindling foreign exchange reserves. The April earnings were lower than the November's proceeds.

In the first ten months of the ongoing fiscal 2023-24, the country posted just a 3.93% year-on-year growth in merchandise exports, earning $47.47 billion.

In the July-April period of FY24, the readymade garment sector earned $40.49 billion, with knitwear posting stronger growth than woven garments. The amount was $38.58 billion in the same period of last fiscal year.

In the first ten months of FY24, the knitwear sector earned $22.88 billion with 9.11% year-on-year growth. The woven sector, however, posted just 0.03% growth earning $17.62 billion.

Exporters hope for a better May

Talking with TBS, Fazlee Shamim Ehsan, CEO of Fatullah Apparels Ltd, said, "Our major markets, the EU and the USA, are still experiencing declining imports of apparel."

Ehsan, also vice president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), mentioned that overall order placement and inquiry trends are better than last year, but prices are shrinking. He expressed hope for a better May.

Echoing Ehsan's sentiments, Shovon Islam, managing director of Sparrow Group, said exports in May may see at least 2% to 3% higher than the same period last year.

"The apparel exports fell to about $1 billion in April compared to March this year. While some orders are coming in, manufacturers are facing challenges in meeting their lead times due to the lack of uninterrupted electricity supply," said Shovon, who is also a director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

Shams Mahmud, managing director of Shasha Denims Ltd, said due to lead time issues, some orders are shifting to China and Turkey.

"Customs clearance problems, tensions surrounding the Israel-Iran conflict, and interruptions in the supply of gas and electricity are major factors contributing to the increase in lead time," he added.

Due to customs clearance issues, particularly regarding the complexity of HS codes for high-value products, many manufacturers are reluctant to continue exporting such products, he said.

"If the government takes action to resolve these issues, it will help increase exports."

Some exporters are also facing challenges in meeting their export lead times due to inadequate gas and electricity supply. As a result, some are reducing their production lines to avoid air freight costs," said Shams Mahmud, who is also a director of the BGMEA.

Most other sectors decline

Among other notable sectors, leather and leather goods experienced a negative growth of 13.32% to $872.45 million in the July-April period.

Home textile, in the meantime, marked a negative growth of 25.32% to $702.56 million, down from $940.8 million in the mentioned period of last fiscal year.

Export earnings from agricultural products, however, saw a positive growth of 6.12% to $774.49 million, higher from $729.8 million in the same period of FY23.

Export receipts from jute and jute goods again experienced negative growth of 7.05% to $716.44 million, down from $770.82 million in July-April of FY23, EPB data stated.

Another potential export sector, engineering products, again fetched a negative growth of 0.4% to $436.35 million, down from $438.11 million in the same period of last fiscal year.