Photo: Messenger
Bangladesh's apparel industry, a major foreign currency earner that fetches around $47 billion yearly, is likely to miss its export target this year as the global economy struggles to regain momentum, potentially impacting the country's foreign reserves.
According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh earned $46.99 billion in the last fiscal year, exceeding the target of $42.61 billion and growing by 16.61 per cent. However, the BGMEA set an ambitious export target of $52.27 billion for the current fiscal year. Unfortunately, during the first ten months (July to April) of the current fiscal year, the sector earned only $40.49 billion. To reach the target, it would need to export an unrealistic $11.78 billion during the remaining two months.
The export earnings during the first ten months of the current fiscal year have already missed the target by 5.77 per cent. While the monthly export trend typically ranges from $4 billion to $5 billion, achieving the target would require an average monthly export of $5.89 billion, an unprecedented level for the country.
Bangladesh Bank data shows that during the first ten months of the fiscal year, remittance inflows stood at $19.08 billion. In comparison, remittances were $24.77 billion in the 2020-'21 fiscal year, $21.03 billion in 2021-'22 (the year the Russia-Ukraine war started), and $21.61 billion in 2022-'23 when the global economy was unstable.
Industry insiders think that the country's foreign reserves have fallen due to the decline in exports and remittances. They anticipate that the crisis will not subside soon if the war continues.
"As the war has prolonged, world trade is under tension, resulting in a 40 per cent to 50 per cent decline in work orders. That's why exports are declining continuously,” said Shahidullah Azim, a director of BGMEA.
Fazle Ehsan Shamim, vice president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told The Daily Messenger, “It was predicted that work orders would decline due to the economic slowdown. Additionally, we are suffering from electricity and gas crises. Export is expected to be lower than the government's calculation.”
“Furthermore, a six-day holiday in April and about a month-long heatwave that affected productivity and worker presence in non-air-conditioned factories are expected to contribute to lower exports in the next two months,” he added.
The monthly trend of ready-made garment (RMG) exports for the current fiscal year shows exports of $3.95 billion in July, $4.04 billion in August, $3.61 billion in September, $3.16 billion in October, $4.05 billion in November, $4.56 billion in December, $4.97 billion in January, $4.49 billion in February, $4.35 billion in March, and $3.29 billion in April.
Remittance inflows for the current fiscal year were $1.97 billion in July, $1.60 billion in August, $1.33 billion in September, $1.98 billion in October, $1.93 billion in November, $1.99 billion in December, $2.10 billion in January, $2.16 billion in February, $1.99 billion in March, and $2.04 billion in April.
However, the donor agency International Monetary Fund (IMF) has imposed a condition for raising the country's foreign reserves to $24.46 billion this year.
Dr Zahid Hussain, the former lead economist at the World Bank's Dhaka office, said, “There is no possibility of increasing the reserves in the next 5-6 months. As a result, the country's economy is going to fall into crisis. If the flow of dollars does not increase, there will be a crisis in the future.”
Additionally, the country's imports have declined by 15.5 per cent, with imports of heavy machinery down by 22 per cent, garment-related raw material imports down by 10 per cent due to dollar scarcity and high costs, consumer goods imports down by 16.5 per cent, and intermediate goods imports down by 21.3 per cent.
Furthermore, due to the dollar crisis, the central bank is unofficially controlling the opening of Letters of Credit (LCs).
Bangladesh's main exports include T-shirts, sweaters, blouses, underwear, agricultural items, leather, jute goods, plastic goods, bicycles, rubber, frozen fish, and other goods.
Messenger/Disha
