According to a research report released by CAL Bangladesh, the apparel export of the country is expected to reach $56 billion by 2026 aided by apparel order shift from China and expansion in the MMF segment.
Bangladesh is expected to grow at a compound annual growth rate of 5.3 percent from 2023 to 2026. The research has factored in the increase in production cost due to the gas price increases. It states that the apparel sector of the country has shown resilience during global economic turndowns. The report says that on the positive side, the decline in global cotton rates due to its decline in consumption and the huge correction in freight rates will reduce the cost of raw material imports.
The reports caution that apparel exporters with higher exposure to the European markets will experience a significant dip in revenue. than those with higher exposure to the US markets.
According to the report titled Bangladesh Apparel Sector – “Rags First But Riches to Follow”, a slowdown in the major apparel markets will weigh down local apparel exports in 2023. Inflation will push wage rates higher, squeezing margins.
Global apparel export growth is also expected to dip in 2023 as the economic outlook for the major apparel markets is expected to remain subdued in the short run but a rebound is expected thereafter. Moving up the value chain through a gradual shift toward higher-margin products will facilitate enhanced top-line growth.
Bangladeshi companies with high fixed-cost structures will experience a substantial reduction in their bottom line while the companies with high debt exposure and high inventory (of cotton as its prices are down), will struggle in 2023, the report states. CAL expects Bangladesh’s export market share in major non-traditional markets to increase to 10 percent in 2026 from the existing share of 8 percent.
