Export sees record over 60% growth in Oct

Bangladesh has recorded its highest ever single-month export earnings amounting to $4.72 billion in October, thanks to a strong rebound in demand for apparels in western countries ahead of festival season and supply disruptions from key competitors that faced fresh waves of pandemic.
  
The export receipts surpassed the $3.46 billion target set for the month, registering a whopping 60.37% year-on-year growth, according to provisional data of the Export Promotion Bureau (EPB) released on Tuesday.
 
Apparel shipment grew by 53.27% to $3.56 billion year-on-year in October, raising the total export earnings to $15.74 billion in the first four months of this fiscal year.

The October earnings were 13.7% higher than the amount earned in September.
 
Leather, agriculture, fish, pharmaceuticals and plastic products also posted impressive growth year-on-year. 
 
However, jute and jute goods lost out, posting over 8.03% negative growth in October.
 
Apparel exporters are hopeful of export growth in the next couple of months, but are concerned about lower unit prices compared to soaring costs of raw materials.
 
Md Shahidullah Azim, vice-president at Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said, "Our exports have witnessed a strong growth as many work orders are shifting to us from our competitor countries because of export disruptions in Vietnam and India owing to Covid-19 and political instability in Myanmar and increased production cost in China."
 
The BGMEA vice-president also said apparel shipment grew as a good amount of payment has come from deferred LC shipments, those were suspended owing to Covid-19. 
 
"But it is not a matter of self-satisfaction as we have to work together for its continuation," he also said.
 
Dr Abdur Razzaque, chairman of the Research and Policy Integration for Development (RAPID) Society, told The Business Standard, "This record growth in October exports reflects the strong recovery of Western developed countries. The demand for goods in those markets have long been subdued by weakened economic activities." 
 
After the withdrawal of lockdowns and other mobility restriction measures, people have started resuming their activities, including being physically present at workplaces as well as tourism related activities. Both have a positive impact on the demand for the types of goods that Bangladesh exports - apparels and other consumer goods such as leather and leather goods, he added.
 
"Since the demand for the items were long subdued, we will see stronger spending patterns by consumers. Also, foreign demand has been buoyed by large stimulus support in developed countries," said Dr Abdur Razzaque.
 
Inflationary pressures in those markets have also boosted prices of goods, he added.
 
However, the 60% growth over the past year does not make much sense as recovery at times was quite feeble, he noted.
 
"The effect of higher spending and generous stimulus are likely to unwind over the coming months and thus this boom could be short-lived. Also, not only Bangladesh, but other countries as well are benefiting from the global economic recovery. China, for instance, clocked a 30% export growth in September."
 
But, China's exports will soon come under tremendous pressure as the US is desperate about containing its bilateral trade deficit against China. This, therefore, presents an opportunity for Bangladesh to expand its exports as China's market share, especially in apparels, is bound to fall further, added Dr Razzaque, also research director of Policy Research Institute.
 
The July-October earnings were 22% higher than $12.84 billion earned in the same period last fiscal year and 13% higher than the set target.
 
The highest earnings, $2.04 billion, came from knitwear shipment, while woven items fetched $1.51 billion, both posting over 52% growth from a year-ago period. 
 
The BGMEA vice-president said they will face challenges in coming days in maintaining shipment schedules as most apparel exporters have faced shortage of working capital as buyers are paying them after up to 180 days of sending goods.
On the other hand, raw materials prices have gone high, but their credit limits are not adjusted with it.

"If banks do not increase our credit limit we will not sustain in business in the coming days," said Azim. 

Shovon Islam, managing director (MD) at Sparrow Group, said the US and European buyers have bought a huge quantity of goods from Bangladesh for next Christmas and the fall and winter seasons in the USA and autumn and winter seasons in the European Union as those countries' economies and stores reopened in keeping with improvement in the Covid-19 situation.

Bangladesh has become the most reliable sourcing hub for buyers as most of its competitor countries are not able to supply goods on time owing to the pandemic, he also said.

Shovon hopes such apparel export growth will continue in November and December. Generally, spring and summer season shipments start from the end of December, but this year it will be in November as buyers are trying to receive those earlier because of the supply chain crisis.

He also said prices of goods shipments in October were not good as most orders were confirmed before the yarn price hike. But they got better prices for late orders that shifted from other countries.

The Sparrow Group MD said owing to a hike in raw material prices, the overhead cost increases 5%-7%, while the garment's cost of making has gone up 3%-4%.

"But we are now receiving positive notices from buyers over getting extra prices for those to be shipped in next January-February," he noted.