Md. Fazlul Hoque, managing director of Plummy fashions ltd. a Narayangonj based knit-wear manufacturer, said “I don’t see any possibility of a brighter prospect for garment exports in next six months as the economies in the EU and the US are yet to start perform well.” Most RMG exporters are anticipating that the next six months will be little tough and challenges will be there of receiving new orders from the garment buyers.
However, they are hopeful that they may see rebound from the month of December this year as they anticipate the western world would be getting a better shape by then. The EU and the US are accounted for about 85% of the country’s apparel shipment.
Indeed, the Russia-Ukraine war has its effect on the global downward market trends but one encouraging sign is consumer prices, which surged to a multi-decade high last year owing to the escalation of energy prices fuelled by the Russia-Ukraine war, are on the decline in the key markets. Inflation was 4.9 % in the USA in April, the first time it fell below 5% in two years, way lower than the four-decade high of 9.1% seen in June last year.
Similarly, the Eurozone’s annual inflation rate fell by more than expected in June to 5.5% amid sharp falls in the cost of energy, down from a 40-year-high of 10.7 % recorded in October.
Local suppliers are worried as their cost of funds might go up after the Bangladesh Bank moved away from the 9% lending rate cap, which had been in place from April 2020 to June this year. According to Hoque, they came to know about the direction of exports based on queries from international retailers and brands. “The number of queries from buyers for the next season is low because of the fallout of the war and the overall economic trend in the EU and the US.”
Mr. Faruque and a number of exporters sounded out pessimism despite the overall shipment from Bangladesh hitting a record high of $55.55 billion in the just-concluded fiscal year and the receipts from the garment sector managed to register a year-on-year growth of 10.27 per cent to $46.99 billion.
Industry people say the growth in times of global economic slowdown took place mainly in terms of value, not in terms of volume, as international retailers and brands paid better prices after taking into account the hike in the raw material costs and the spike in the cost of production in Bangladesh.