After a prolonged spell of growth for 13 months, Bangladesh's apparel exports have started to see the flipside – the country registered more than 12% year-on-year negative growth in the first 18 days of September.
In these 18 days, the readymade garment sector raked in $1.72 billion in contrast to $1.96 billion in the same period last fiscal year, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
Industry people have put this fall in export receipts down to record inflation in the sector's major destinations fuelled by the ongoing Russia-Ukraine war.
In the face of reduced consumer demand, a number of retailers, including Walmart, have already cancelled some orders. Besides, some buyers are requesting exporters to delay shipments or suspend orders ready for delivery.
The sector experienced negative growth on 11 days in September, said sources at the BGMEA.
The sector enjoyed a whopping 89% growth year-on-year in a single day during the days, and also witnessed a negative growth of around 64% in a day, according to BGMEA data.
The BGMEA came up with the calculation based on data from the National Board of Revenue as the Export Promotion Bureau is yet to make the official announcement.
Talking to The Business Standard, apparel exporters said the slowdown of apparel shipments was expected from August this year as most factories have been facing a fall in work orders, which is being reflected in export earnings.
They also fear that it might continue till April-May next year.
Sparrow Group Managing Director Shovon Islam said the industry is experiencing a slowdown as retailers are stuck with too much inventory at their stores.
The war-driven economic recession has badly affected clothing demand. "We are now facing up to 20% shortage of orders for regular items and up to 6% for fashion items, which may continue for six to seven months," he told The Business Standard.
Plummy Fashion Managing Director Md Fazlul Hoque said some knitting factories have already shut down in the Narayanganj area because of order shortages that had continued over two months.
BGMEA President Faruque Hassan told TBS due to high inflation and increased bank interest rates in export destination countries, a number of buyers have been going slow in placing new orders over the last two months, and many of them are asking to hold shipments. That is why apparel shipments are facing a negative growth in September.
The sector was lucky to receive some new orders in August from some European buyers, but the prices they offered were very low, he said.
Entrepreneurs are looking for new orders from new markets, especially from Japan, Korea and India for the survival of the industry, the BGMEA president noted.
"We are approaching them to reduce dependency on the European market, and we have already had quite good growth on the market in the last fiscal year," he added.
The industry is also investing in diversifying products and manufacturing manmade fibre-based clothes as part of making this business sustainable, he pointed out.