Bangladesh’s ready-made garment (RMG) industry has started to suffer from political instability and worker unrest, which has affected the industry’s capacity to compete in important Western markets. As the unrest persists, competitors like China, Vietnam, India, and Cambodia are increasingly taking advantage of it.
The Export Promotion Bureau (EPB) reports that during the July–September quarter of the current fiscal year, Bangladesh’s garment exports increased by a moderate 5.3 per cent year over year to US $ 9.28 billion. However, a drop in clothing exports to important destinations during the first eight months of 2024 has raised questions about this rise. For example, according to data from the Office of Textiles and Apparel (OTEXA), exports to the United States decreased 9.16 per cent year over year, totalling US $ 4.70 billion between January and August.
Both decreased demand in the US market and persistent domestic issues, such as factory closures and production delays brought on by labour strife, are to blame for the drop in Bangladeshi clothing exports. The challenges faced by Bangladeshi exporters were highlighted by the 8.98 per cent decline in total textile and apparel shipments to the USA over the same time period.
Competitors of Bangladesh have done better, gaining market shares in the US and the EU. For instance, Vietnam’s clothing exports increased by 5.2 per cent between January and August, while India’s witnessed a 7.6 per cent increase. On the other hand, Bangladesh’s export volume of clothing fell by 3.8 per cent over this time, suggesting that foreign retailers’ sourcing preferences have changed.
Broader economic considerations also exacerbate the problem. September saw a recovery in US retail sales due to higher consumer spending as interest rates and inflation declined. Other nations have gained ground in the US garment sector as a result of this revival in demand.
Bangladesh’s exports increased by just 2.8 per cent while the EU’s member countries’ imports of clothing increased by 3.3 per cent. During the same period, rivals such as China, India, Cambodia, Vietnam, and Pakistan saw noticeably faster growth rates.
The protracted disturbance has caused production schedule disruptions and shipment delays, which local exporters have raised concern over. Bangladeshi exporters are under additional strain as a result of some foreign merchants choosing to either halt factory visits or move orders to more reliable sourcing nations.
It is still hoped that political stability will help Bangladesh regain its place in the world apparel market as it navigates these difficult times. The short-term future is still unclear, though, as other nations keep gaining ground in the face of persistent disruptions.