The total exports of the country during FY2019-2020 were $33.67 billion compared to $40.54 billion in the previous fiscal year. Meanwhile, the export target of FY2019-2020 was $45.5 billion.
The wrath of the coronavirus on the global supply chain has forced Bangladesh missing the export target by 16 percent. Judging by our high exposure trade strategies, the consequences could have been worse.
Even though exports have grown in the previous years, we are far from achieving sustainability and the core problem that impedes our sustainability is consolidation.
The principle of diversification is no new concept, and neither is the fact that Bangladesh's trade basket needs diversification.
The National Board of Revenue (NBR) divides the country's exports into 98 export product categories (2-digit HS Code), of which apparel and textile have four main categories of products.
However, these four categories alone account for more than 88 percent ($28.9 billion) of total exports, while all other categories make up the remaining 12 percent.
The disparity between the exports of different product categories is such that even a small deviation in apparel and textile demand will devastate the entire economy. The consequences and implication of this have been made evident by the pandemic which has traumatised the RMG industry of Bangladesh.
Unfortunately, consolidation of the trade basket is not the only issue.
Even though overall exports have decreased, the United States, Germany, United Kingdom, Spain and France are still Bangladesh's largest export destinations, accounting for around 54 percent of its total exports during FY2019-20.
The US, UK, Germany, Spain, and France have consistently been Bangladesh's top exporting destinations in recent years.
While the consistency indicates strong trade ties with these nations, at the same time, it leaves us exposed to external risks. Therefore, the problem of diversification is not confined to trade basket only but also diversification of exporting nations.
At the same time, local exporters have not done well analysing global consumer trends.
Bangladesh's leather exports accounted for around $220 million in FY2019-20. The United States is Bangladesh's largest importers of leather products accounting for $48.4 million, followed by Japan, India. Belgium, Germany (for two consecutive fiscal years).
However, many of Bangladesh's leather export destinations are developed countries where brands like Nike and Adidas have decided to phase out the use of leather as raw materials.
With consumer acceptance of leather products in the western world shifting, Bangladesh needs to diversify its focus on other countries for exporting its leather products.
Furthermore, Bangladesh's export network in Asia is extremely weak. Bangladesh's only significant export destinations in Asia are Japan, India and China accounting for $1.12 billion (0.03 percent), $1.10 billion (0.03 percent) and $600.11 million (0.018 percent) respectively.
The scenario is similar in African countries. In all these regions, there is a demand for pharmaceuticals, electronics, rice and wheat, fish, meat, apparel and textile. Bangladesh must tap into these emerging markets to create a balanced and well-diversified export network.
In conclusion, the way forward is developing infrastructure to promote export of prospective product categories, like footwear or frozen food, creating trade ties with emerging nations, and equipping our local business with insights and global demand analytics to enable them to assess where and whom to sell and what.
As the race to find a potential vaccine goes on, which would bring an end to this pandemic, Bangladesh needs a revamped export strategy that would set its sail towards sustainable growth.
Abrar Ahmed is a student of Bangladesh University of Professionals.