$67b export target set for FY23 amid global recession fears

Despite the World Bank's forecast that global economic growth would slump this year, Bangladesh has set a $67 billion export target for the current fiscal 2022-23, which is 10.10% more than the actual export earnings in the last fiscal year.

"Of the target, $58 billion will come from exporting goods and $9 billion from the service sector," Commerce Minister Tipu Munshi said during a press briefing at the Secretariat yesterday.

The target for exporting goods is 11.36% more than the last fiscal year's earnings – $52.08 billion. Earnings from the service sector exports were $8 billion in that fiscal year.

Tipu Munshi said the export target has been set considering the fear of global recession. Otherwise, it would have been higher.

He said, "Bangladesh is getting some geopolitical benefits. Orders from the USA have shifted from China; Bangladesh along with Vietnam, Cambodia, India, and Pakistan are enjoying the benefit of it.

"This is the first time export to a single country – the USA – is crossing $10 billion. Of this $10 billion, $9 billion came from the RMG sector. I myself am an RMG exporter and was once BGMEA president. I think the RMG orders will not decline."

The minister further said he does not think that load shedding and rationing will hamper the country's production as it is only temporary and will not last throughout the year.

Tipu Munshi said, "The Russia-Ukraine war has been affecting supply chains and raising prices of many necessary commodities, especially food items."

"Rising cases of Covid-19 in the western countries, inflation, decrease of demand in Europe and America, and heatwave in the western Europe may pose some risks to the export target," he added. 

Commerce Minister Tipu Munshi said the government will offer policy support to ensure the export target is met. 

"A combined effort by the government and private sector will help us achieve the export target," the minister said. 

At the press briefing, Commerce Secretary Tapan Kanti Ghosh said in the last fiscal the country exported 20% more than it targeted. The importing countries had no stock of products after Covid-19 situation eased, so there were demands from the buyers and the export increased a lot. But this is not the case this year, so it will not be possible to maintain such a high growth in the new fiscal year.

The commerce secretary said, "Demand in the export market will decrease due to inflation. Besides, the cotton price rose by 75% in the last fiscal year, which in turn drove up the prices of ready-made garments. Currently, the cotton price is going down, so the export price of garments will also go down."

"Inflation and joblessness are increasing in the USA and Europe. According to the International Monetary Fund, the global growth rate would be 4.4%, and next year it might be even lower," he added.

The World Bank's latest global economic forecast has said most countries should begin preparing for a recession. It added that the global economy had already been impaired by the aftereffects of the Covid-19 pandemic and the Russia-Ukraine war, which left international supply chains in tatters and significantly hampered income growth and poverty reduction efforts in developing countries.

According to the recently passed FY23 budget, Bangladesh's GDP growth rate is 7.25%.  

The actual export of the ready-made garment sector during the last fiscal was $42.2 billion. The target has been set at $46 billion in the current fiscal for this sector.

Bangladesh's ready-made garments industry has been bracing for another battle for survival as most factories are getting orders less than 30% of their capacity as record inflation rates across Europe and the US make consumers less willing to loosen their purse strings for new outfits and fashion accessories.

Regarding the exports target, Faruque Hassan, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told TBS, "It is a difficult target considering the present global economic situation as well as the global demand in the fashion industry. But it can be achieved if the government and private sector work together. 

"Export-oriented industries should get gas and electricity on a priority basis. Besides, the currency should be made export-friendly in accordance with the competitive countries."

The BGMEA president further said, "The government should give financial support to non-cotton or man-made fibre apparel. The port and customs should be more export friendly. Imported raw materials and export goods should be released on time."

However, he feared that the unit price of the export product may decline due to a fall in cotton price in the global market.

"Considering the global financial situation and all indicators, I think the apparel export target is higher than what possible in reality," said Fazlul Hoque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

"Fixing export targets is always missing any plan or roadmap to achieve that. We should identify the role, responsibility, and efforts of everyone to achieve the targets," he added.