Bangladesh's exports soar by 15.26% in July

Bangladesh's merchandise exports grew by an impressive 15.26% year-on-year to $4.59 billion in July, the first month of the new fiscal year, as per government data.

This robust growth was driven by an acceleration in the shipment of apparel items, which will help the country minimise its ongoing foreign exchange crisis. A day earlier, the Bangladesh Bank reported nearly a 6% decline in remittance inflows in July.

Infographic: TBS

The data released on Wednesday by the Export Promotion Bureau (EPB) showed that the garment sector contributed over 86% to the overall export earnings.

The other sectors – primary commodities, jute and jute goods, frozen and live fish, agricultural products, manufactured commodities, plastic products, leather products, and non-leather footwear – also experienced positive growth year-on-year.

The growth came as a surprise to apparel exporters, while economists observe a big gap between the experiences of industry people and the data provided by the government.

Economists have suggested that government agencies and exporters' associations work together to verify the export data.

Seeking anonymity, a leading apparel exporter told The Business Standard that his group exported 3.62 million pieces of readymade garments worth $285.7 million in the first six months of this year. This figure was lower compared to the export of 4.91 million pieces worth $373.38 million during the same period in 2022.

The entrepreneur also mentioned that in terms of value, his exports decreased by 23.60% during this period, while in terms of quantity, they saw 26.38% negative growth.

The exporter said all his factories are running at 20% below capacity due to order shortages. This situation is expected to continue until December this year.

According to the EPB, the garments sector, covering both knitwear and woven items, proved to be a major driving force, accounting for over $3.95 billion in exports. Knitwear exports exhibited remarkable growth, surging by more than 22%, while woven exports saw a commendable increase of 11.54% in July 2023.

"We are very surprised to see the growth in apparel export; as an association, we observed that there was a 20% negative growth in utilisation declaration issues," said Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

He also mentioned that due to order shortages, most of the factories are running at less capacity, which is reflected in banks' foreign currency inflow through exports.

Echoing Hatem, Nipa Group Chairman Md Khosru Chowdhury said every factory is running at about 30% less than its installed capacity. On the other hand, buyers have squeezed prices by 12% to 20% year-on-year, he said, adding that factories have to export a greater quantity of apparel to cover that reduced value.

"Apparel exporters have been struggling since July last year because of global inflation driven by the Russia-Ukraine war," said Khosru Chowdhury, who is also a director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

He hoped that the business might come into a positive trend by November onward, but prices may remain a challenge for exporters.

Mohammad Abdur Razzaque, director of research at the Policy Research Institute of Bangladesh, said, "We observed that exports to the US market are declining, and EU markets are also becoming weak due to global inflation.

"Considering the situation, we request the Bangladesh Bank, the National Board of Revenue, the EPB, and exporters' associations to sit immediately to verify the export data."

How other sectors performed

Among other sectors, leather, home textiles, and engineering products registered negative growth in the first month of the new fiscal year.

The shipments of agriculture products grew by 14.53% year-on-year to $72.58 million. The sector's earnings are 7.46% higher than the monthly target of $67.54 million.

Kamruzzaman Kamal, director (marketing) at Pran-RFL Group, told TBS that, in general, the sector saw a downtrend in the final quarter of the last fiscal year.

"We are hopeful this situation will improve in this fiscal year as some of the major challenges have already been addressed," he added.

Home textile exports faced challenges during this period. Insiders attributed the decline in home textile exports to reduced demand for the products in the post-Covid era.

Home textile exports experienced over 40% negative growth to stand at $56.83 billion in July, which is 36.33% lower than the $89.26 million target.

Talking to TBS, Rashed Mosharraf, executive director of Zaber & Zubair Fabrics, said this sector has not been faring well for long, adding, "It may bounce back after February next year if there are no unforeseen circumstances again."

Mentioning that major markets such as the EU and the USA deferred their purchases, he added that the ongoing Russia-Ukraine war has increased energy and commodity prices, further impacting the home textile sector.

"Moreover, local home textile manufacturers are facing various challenges such as decreased production at factories due to energy shortages, surges in utility prices, and rising costs of raw materials," Rashed Mosharraf said, adding that manufacturers are now cutting costs to sustain the business.

He also mentioned that the increased gas price poses more challenges for having a competitive offer for customers.

After continuing three months of negative growth, the once billion-dollar-earner jute and jute goods sector, which used to be called "golden fibre", experienced 2.75% growth to stand at $65.67 million worth of exports.

Earlier, Akij Group Chairman Sheikh Mohammed Nasir Uddin said, "In the just concluded fiscal year, the jute sector went through a hardship, and it was expected as local jute trader-syndicates hiked raw jute prices irrationally over the past years. Some of our buyers have moved to alternative fibres, as a consequence."

"This year, Bangladesh jute farmers saw bumper yields in cultivation, which will naturally stabilise the market," he added.

Leather and leather products exports fell by 0.67% year-on-year to $98.74 million. However, the sector's earnings are 1.2% higher than the monthly target of $97.57 million.