Bangladesh's apparel exports have raked in around $2.78 billion with nearly 14% year-on-year growth in the first 27 days of July, while the sector is bracing for around 30% shortage of work orders in the coming months.
The sector enjoyed a whopping 1,128% growth year-on-year in a single day during the period, but the shipment also witnessed zero export on 10 July, said sources at the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
The BGMEA came up with the calculation based on the National Board of Revenue data as the Export Promotion Bureau (EPB) is yet to make the official announcement.
Earlier, BGMEA President Faruque Hassan predicted that the sector will perform a double-digit growth in July-August compared to the same period last year.
Industry leaders fear that if the global economy does not recover soon from the economic slowdown caused by the ongoing war between Russia and Ukraine, apparel exports may fail to achieve the last fiscal year's record receipts amounting to $42.2 billion. The government has set a target to earn $46 billion through RMG exports in the current fiscal year.
Bangladesh's major export destinations – the United States and European countries – are now facing a 40-year high inflation.
In FY22, readymade garment shipments amounted to $42.2 billion with about 35% year-on-year growth, according to data published by the EPB.
Sparrow Group Managing director Shovon Islam told The Business Standard that apparel exports in July came down significantly because of Eid holidays – a number of exporters completed shipments of their goods in June ahead of their fixed schedules, considering the vacation.
"Issuance of utilisation declaration certificates by the BGMEA also dropped about 15%, which will be reflected in coming months' export earnings," he also said.
USA buyers, such as Walmart and Target, officially announced that they will procure 30% less for the spring season as they have huge unsold inventory, he added.
For the first time, exports to a single country – the USA – are crossing $10 billion. Of this $10 billion, $9 billion came from the RMG sector, according to the EPB.
Bangladesh may lose a share in the US market in FY23 as its economy is facing inflationary pressure, Shovon Islam noted.
Spring season apparels are scheduled to be produced in September-December, he said, adding that other buyers, including H&M, Inditex, American Eagle, are also placing less volume of orders as their stores saw less demand for apparels.
Shovon Islam hoped the next summer season may bring good news for apparel exporters.
Last year, apparel exports got about $4 billion in additional value owing to high cotton prices, but currently, cotton prices are going down, which may be reflected in annual export value, he added.
"Overall exports might fall 20% compared to last fiscal year's value or reach $34 billion by the end of FY23," said the Sparrow Group managing director.
Fazlul Hoque, managing director of Plummy Fashion, said the apparel sector will face challenges to reach its last fiscal year's value as the industry is witnessing a slowdown in orders.
It will bring a very tough time for every exporter, he also said, adding that those are expanding capacity, riding on the higher volume of orders last year, may face a shortage of orders.
Every exporter should focus on diversifying products and exploring new markets and strengthening their marketing capacity, he noted.
"We are in talks with a Brazilian buyer, which is a new market for us," the managing director of Plummy fashion noted.
Team Group Managing Director Abdullah-Hil-Rakib said it is very tough to make any prediction due to the global energy crisis that has had effects on everything, from supply chain to freight costs to raw materials to end products demand.
"The crisis is bigger than the pandemic," he also said, adding that if the global economic situation does not improve by October this year, many factories might cut 50% of their capacity.
The government may have to provide factories with another stimulus support to prevent termination of workers," said Abdullah-Hil-Rakib, also a director of BGMEA.