Export earnings see $1b jump in May
Despite the year-on-year growth, the current earnings still fall 5.29% short of the government-set target of $5.12 billion for the month of May.
Bangladesh's merchandise exports grew 26% to $4.85 billion this May, compared to $3.83 billion in the same month last year, according to data released by the Export Promotion Bureau (EPB) on Sunday.
EPB data reveal that merchandise exports from July to May of the current fiscal 2022-23 surged by 7.11% year-on-year, reaching $50.5 billion.
Despite the year-on-year growth, the current earnings still fall 5.29% short of the government-set target of $5.12 billion for the month of May.
The surge in May export receipts follows two consecutive months of negative growth and is primarily driven by a significant jump in apparel exports. In March this year, the country's total export earnings were $4.64 billion, which fell to $3.96 billion in the following month, EPB data show.
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In May, the apparel sector registered a 28.3% growth to $4.05 billion in export earnings, compared to $3.16 billion in May 2022.
Of the total RMG export earnings this May, the knitwear sector accounted for $2.33 billion, while the woven sector contributed $1.94 billion.
Among other major export sectors, leather and leather goods, as well as engineering products, saw positive growth in May. However, home textiles, jute and jute goods, agricultural products, and leather footwear experienced a decline in exports.
Exporters have attributed the strong growth in the apparel sector to the deferred shipments from April to May due to the Eid-ul-Fitr holidays. However, other sectors have struggled due to declining demand in major markets, compounded by the global economic slowdown.
During this period, the apparel sector earned $42.63 billion, reflecting a 10.67% year-on-year growth. Notably, this figure is 0.76% higher than the sector's strategic target.
Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), acknowledged that last May saw 11 days of factory closures due to the Eid-ul-Fitr vacation, which could account for the expected year-on-year growth.
However, this growth is higher than expected as most factories are currently operating at 40%-50% below capacity due to a lack of orders, particularly from the EU and USA markets, he told The Business Standard.
Furthermore, factory owners face challenges in producing and shipping goods on time due to gas and electricity shortages, as highlighted by Hatem.
Shahidullah Azim, vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), explained that the apparel export scenario is not favourable, with most factories experiencing order shortages. He expressed concerns that this situation may persist until the end of the year.
In May, exports of leather and leather items witnessed positive growth of approximately 25%, amounting to $113.75 million. Comparatively, the earnings in the same month of the previous fiscal year were $103.81 million.
Additionally, the export of engineering products experienced significant growth, reaching about $81 million, an 81.5% increase from the $44.55 million recorded in the same period of the previous fiscal year.
Md Abdur Razzaque, president of the Bangladesh Engineering Industry Owners Association (BEIOA), noted that while some exporters are currently performing well, the lack of LC opening facilities for importing raw materials may hinder their continued success.
He also highlighted the informal nature of the sector, which relies on unskilled manpower, despite its immense potential.
The home textile sector faced a considerable decline in exports, dropping by 38% to $84.18 million in May, compared to $135.77 million in the same month last year.
Rashed Mosharraf, executive director (home) of Zaber & Zubair Fabrics Ltd, expressed scepticism about the recovery of the home textile export industry, stating that it may not bounce back until February of next year unless unforeseen circumstances arise.
He cited the excess stock held by major markets such as Germany and the USA, which has deterred their purchasing.
He also mentioned that the ongoing Russia-Ukraine war has increased energy and commodity prices, further impacting the home textile sector.
Moreover, local home textile manufacturers are grappling with various challenges, including factories operating at approximately 30% capacity, a significant increase in utility prices (around 150%), and rising costs of raw materials.
Mosharraf added that these manufacturers are attempting to cut additional costs to sustain their businesses.
Meanwhile, the jute industry witnessed a decline of 12.2%, with export earnings amounting to $77.78 million in May this year, down from $88.54 million in the same month a year ago.
