Export earnings saw a steep 83 percent fall year-on-year in April due to halted production and order cancellations in the apparel sector brought on by a countrywide shutdown and the global economic fallout of Covid-19.
Bangladesh earned $520 million from exports in April this year, compared to $3 billion during the same month last year, according to central bank data.
Even before the coronavirus attack in March, export earnings were in a downward trend due to a global economic crisis and pressure put by the pandemic on the country's foreign exchange reserve.
In March, export growth fell by 18.29 percent year-on-year to $2.73 billion.
Overall earnings fell by 13 percent in the first nine months of the current fiscal year to $29.54 billion.
The apparel sector, which contributes more than 85 percent of the total export, experienced massive order cancellations, which accounted for a big fall in export earnings, said industry experts.
The drastic fall in export will suppress domestic demand and severely hurt employment in the garment sector, said Ahsan H Mansur, Executive Director of the Policy Research Institute, Bangladesh.
He said income will decline for both workers and exporters causing slump in domestic demand which will ultimately affect the country's GDP growth.
Another impact will be on the balance of payment. But the fall in oil price in the global market and slowdown in import of raw materials of the garment sector will offset the loss of export earnings to some extent.
"We have nothing to do to come out from this fall out until the global economies revive," he said.
The government should take stronger measures to boost domestic demand by transfering money to the people's hand until export picks up by August or September, he suggested.
Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) recently wrote to the government that 1,110 garment factories had lost export orders worth $3.02 billion since the Covid-19 outbreak.
The huge number of order cancellations has plunged the entire garment industry into a severe crisis. Moreover, production in most garment factories has been halted due to the countrywide shutdown.
The cancellation of export orders also led to a pile-up of imported raw materials in the warehouse of the Dhaka airport.
A total of 2,033 tonnes of imported raw materials lay undelivered in the warehouse until April 20. But the warehouse has a storage capacity of 800 tonnes, thus creating a problem for Biman Bangladesh Airlines – the authority in charge of maintaining the warehouse.
Biman says that a large portion of the undelivered raw materials were imported by garment factories.
Amid this situation, the government has allowed the export-oriented sector to reopen factories from April 26 despite an ongoing lockdown to reduce economic losses.
The government has also provided cash incentives worth Tk5,000 crore to the sector so that it can pay wages. Banks began disbursing this money to the mobile banking accounts of the workers from this week.
Although export earnings remain low, banks are still in a comfortable position regarding dollars due to low import expenditure.
The inter-bank exchange rate remained stable at Tk 84.95 for the last two months, according to Bangladesh Bank data.
Total foreign exchange reserve stood at $33.10 billion as of 3 May, according to Bangladesh Bank data.