Starting from March this year – after coronavirus cases began emerging in the country and subsequently garment manufacturing units were ordered to be shut for almost a month to arrest the rapid growth of the epidemic alongside large-scale order cancellations and store closures by brands and retailers across the globe – Bangladesh’s exports have been on the wane.
Especially in April, apparel exports took a massive nosedive of around 85 per cent.
As per data of the country’s Export Promotion Bureau (EPB), export fall continued well into the month of May with Bangladesh’s overall export earnings in May declining by 61.57 per cent to US $1.46 billion from what was US $ 3.81 billion in the same month last year.
Garment exports, which account for 84.20 per cent of the total export, in May, fell by 62 per cent to US $ 1.23 billion compared to that of US $ 3.24 billion in the corresponding period of last year.
The coronavirus pandemic has adversely impacted the production of goods as well as sales in export destinations, disrupting supply chains across the globe. As a result, the exports of Bangladesh have seen a sharp decline in the last couple of months, exporters said.
The country has gone through lockdown, which forced factory owners to keep production suspended till April, which was reopened only in the last week of the month.
“The poor export performance was expected, as our business was anyway dipping because of many issues. And now with COVID-19, global sales revenue will dip 27-30 per cent and it will wipe off US $ 297 billion from global apparel value in 2020,” maintained Dr. Rubana Huq, President, Bangladesh Garment Manufacturers and Exporters Association (BGMEA), adding as a result, Bangladesh’s exports may decline by 30 per cent during June-December 2020.
Mohammad Hatem, Senior Vice President, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said, “I see no hope in the coming 3-4 months, as the placement of orders has remained almost halted due to the pandemic. I think the demand for apparel will not increase soon in the global market.” while underlining that the export data showed the volume that the country’s apparel makers shipped in May after deducting the quantity cancelled by the buyers and that the situation would not change in June.
“Since export performance depends on demand in global markets, which has gone through closures due to the lockdown, it will take time to recover from the downtrend,” highlighted Khondaker Golam Moazzem, Research Director, Centre for Policy Dialogue (CPD).
Over the past 18 years, CPD has emerged as Bangladesh’s premier civil society think-tank, and has established its credibility as one of the very few platforms in Bangladesh where civil society organisations, stakeholder groups and political parties, often with diverse views and perspectives, agree to sit around a dialogue table, and conduct informed discussions about key issues of developmental concerns and interests.
Khondaker Golam advised garment manufacturers in Bangladesh to take advantage of the growing need of health-related items globally such as Personal Protective Equipment, face masks, etc., to try and counter the export fall.
Keeping in consideration the challenges that the current situation has brought for the industry, Rubana proposed a number of steps. To start with, she has called for creation of a virtual marketplace in the lines of Amazon to retain earnings from the readymade garment products in the changed global situation besides calling for policy support from the Government to fight with the coronavirus fallout.
Exchange rate premium of Taka 5 a dollar on the local value retention, special treatment for export to markets having high tariffs, research and development, and trial production for new products for product diversification are some of the other steps proposed by the BGMEA President in this changing milieu.
The BGMEA President’s proposal carries even more significance considering that the export earnings from readymade garments in the 11 months of FY20 fell by 18.99 per cent to US $ 25.70 billion from what was US $ 31.73 billion in the same period of FY19 with the earnings from RMG falling 26.31 per cent short of the target set for the period.
The earnings from woven garments fell by 19.22 per cent to US $ 12.96 billion in the period, while the earnings from knitwear exports dropped by 18.74 per cent to US $ 12.74 billion, the EPB data showed.
However, on the positive side, exports in May made a significant improvement of around three times from the export earning of what was a mere US $ 520 million in April this year. And with brands and retailers opening their stores the world over now, the demand of apparel items is expected to gain more traction.
What’s more, Bangladesh’s apparel exports to the United States, a major export destination, grew by 2.13 per cent during the first 4 months of 2020 calendar year, compared to the same period of last year, while exports from its competitors like India, China and Vietnam have declined.
As per data of the Office of Textiles and Apparel (OTEXA) affiliated with the US Department of Commerce, Bangladesh has fetched US $ 2.07 billion from apparel exports to the US market from January to April of 2020 against US $ 2.03 billion earnings of the corresponding period of 2019. During January-April period of this calendar year, Bangladesh shipped 748 million square metres of apparel items, which was 728.21 million square metres in the same period of last year.
The US imported textile and apparel items worth US $ 2.14 billion from Bangladesh from January to April of 2020, it showed.
After the Rana Plaza incident of 2013, Bangladesh’s apparel exports to the US declined to US $ 4.83 billion in 2014, which was US $ 4.95 billion in 2013. In 2015, exports grew to US $ 5.40 billion, but declined in next 2 consecutive years before making some gains from 2018 with Bangladesh earning US $5.93 billion from apparel exports to the US in 2019.
On the other hand, Chinese apparel exports to the US witnessed a negative growth of 46.44 per cent to US $ 3.88 billion in the first 4 months of this year (China shipped apparel items worth US $ 7.26 billion to the US during January-April period of 2019), while garment exports of Vietnam also declined by 1.31 per cent to US $ 4.18 billion, and India witnessed 13.07 per cent fall to US $ 1.36 billion during the same period of 2020.
The statistics indicate Bangladesh has been doing well compared to its competitors before the lockdown imposed due to the ongoing coronavirus pandemic. Even though there is no surety that exports would continue to grow in the USA, some experts and industry leaders believe that improving employment situation in the US gives a good indication that their consumers might spend more money on clothing.
As per a recent report, the US has regained 2.5 million jobs in May and the unemployment rate fell to 13.3 per cent. As every state in the US has begun to reopen their economies to some degree in May, Bureau of Labour Statistics said 2.7 million people who had temporarily lost jobs amid the pandemic returned to work.
Employment rebounded by 464,000 in construction, by 368,000 in retail and by 225,000 in manufacturing, while the healthcare industry also began to recover from record job losses in April, boosting employment by 312,000.
The US President and some of his advisers earlier in April had also indicated towards a speedy recovery for the world’s biggest economy. “I think we’re going to have a tremendous rebound. There’s great energy and a great pent-up demand,” maintained the US President in one of his press briefings, while Treasury Secretary Steven Mnuchin on his part anticipates “a very strong rebound later this year.”
The above developments, if at all, mean Bangladesh can expect some positive outcome in apparel exports in the coming days, which could very well mean a rebound of apparel exports, more so if steps proposed by the BGMEA are taken into account and implemented too.