Several factors like the Russia-Ukraine war, global economic crisis, low consumer buying in its main markets of the US and EU, and the biggest of all, irregular gas supply, steep hike in fuel prices, and volatility in exchange rates have led to creating uncertain times for Bangladeshi garment export sector.
The fuel price hike has led to an increase in the cost of production as well as transportation. At the same time, the garment factories also have to face irregular supply of electricity and gas.
The industry in the country has witnessed exponential growth in clothing exports in the last 40 years, which thrived on low-priced gas and also low labor wages, along with getting duty-free export status on account of its least developed country (LDC) status.
According to media reports, at the beginning of the ‘80’s’80s, garment exports totaled only $ 31.5 million or just 3.89 percent of the total exports of Bangladesh. But the 90’s saw exports crossing the $1 billion mark and accounting for around 50 percent of the country’s exports.
The growth thereafter witnessed phenomenal rates and rose by 25 percent annually to touch $42.6 billion in fiscal 2021-22 due to the quick recovery in its main export markets from the impact of COVID-19 and thereby accounted for around 80 percent of the country’s overall exports.
Despite the lingering impact of Covid-19, the country still was able to revive its garment exports with shipments skyrocketing 35.47 percent over fiscal 2020-2021 to $42.613 billion in fiscal 2021-22 (July-June).
But the start of the Russia-Ukraine war which started in February 2022 turned the tables for the second biggest apparel exporter in the world. The increase in food, fuel, and commodity prices across the world, dampened consumer spending in its key markets, particularly the EU, which accounts for almost 50% of exports of garments from Bangladesh.
Germany, which is one of the biggest EU importers of Bangladeshi garments, has slipped into recession in 2023, while inflation is looming at around 8 percent in the US, which is the country’s biggest export market, which could mean less disposable incomes, leaving less to spend on clothing.
Uncertain times ahead for Bangladesh garment sector
