Country’s export earnings dropped by 2.94 per cent year-on-year in the first quarter (July-September) of the 2019-20 fiscal year as earnings fell for the second consecutive month in September as global economic woes hit consumption of readymade garment products in major export destinations, exporters said.
They said that the drop in export earnings in the quarter occurred after more than a decade showed signs of stagnancy as the world major economies were facing recession warnings amid the US-China trade war.
Bangladesh’s overall export earnings in July-September of FY20 decreased to $9.64 billion from $9.94 billion in the same period of FY19, according to the Export Promotion Bureau data released on Sunday.
The earnings are 11.05 per cent lower than the government-set target for the period.
In September of FY20, export earnings fell by 7.30 per cent to $2.91 billion from $3.14 billion in the same month of FY19. The earnings dropped by 11.49 per cent in August of FY20.
Economists said that if the current trend of negative growth of export earnings continued till the end of this fiscal year, the country’s economy would be hit hard, affecting the government’s budget implementation as few other fronts of the economy were not doing well.
The revenue earnings by the National Board of Revenue in the first month of FY20 grew by 12.58 per cent against the annual growth target of around 30 per cent.
The country’s import payments also fell by 2.46 per cent in July of the current FY20 as business expansion has stagnated. As a result, the private sector credit growth hit a nine-year low of 10.68 per cent in August.
Experts and exporters said that consumption of RMG products decreased all over the world as US-China trade war, Brexit issue, contraction of the economies of Argentina, South Africa and Iran instilled recession fears in the global consumers.
The EPB data showed that earnings from RMG exports in the three months of FY20 fell by 1.64 per cent to $8.05 billion from $8.19 billion in the same period of FY19.
‘It is not a good thing and the government will have to rethink about the domestic policy to achieve required export earnings growth,’ Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, told New Age on Sunday.
He said although it was too early to make comments on a possible global recession, it seemed the global economic slowdown might hurt Bangladesh’s exports this year.
‘We thought that the US-China trade war would help us grow our exports but it could not give us more benefits,’ Mansur said.
He said that the government should rethink about the exchange rate as an immediate reviving tool for the export growth.
Earnings from woven garments fell by 2.45 per cent to $3.88 billion in July-September of FY20 from $3.98 billion in the same period of last fiscal year.
Knitwear export fell by 0.87 per cent to $4.17 billion from $4.20 billion.
‘The recent export order situation is not good. The overall consumption of RMG products has decreased in the globe as consumers are in fear of a possible economic recession due to recent slowdown in the US economy, dismal economic performances in the UK and Germany, lowest ever industrial production growth in China, shrinkage of the economies of Argentina, South Africa and Iran,’ Mahmud Hasan Khan Babu, former vice-president of the Bangladesh Garment Manufacturers and Exporters Association, told New Age.
He said that global consumers had been decreasing their purchase and going for more durable products, whereas Bangladeshi manufacturers expanded their capacity without any study on global consumption trend.
‘Due to the unplanned expansion, our production is increasing in quantity but we have failed to gain the price benefits,’ Babu said.
Echoing Mansur, he said that there was no alternative for Bangladesh to devaluing its currency against the dollar to regain export earnings growth.
‘If the currency rate is not rearranged, Bangladesh will have to face serious challenges in the export market up to end of 2020,’ Babu added.
Economists and businesses feared that Bangladesh’s export income and remittance would be hit hard if a global economic recession occurred in the near future.
They said that the US-China trade war, Brexit issue, Iran crisis and many other developments were leading to a lot of uncertainties in the global economy.
Economists also observed that though Bangladesh was getting short-term benefit due to the US-China trade war, the benefit was very insignificant.
The country needs to diversify its trade in a large way for sustainability, they suggested.
Export earnings from leather and leather goods in July-September of FY20 fell by 5.06 per cent to $254.39 million from $267.94 million in the same period of last fiscal year.
Export earnings from leather-footwear in the first quarter decreased by 9.28 per cent to $159.23 million while other leather products fetched $64.47 million with a 25.28-per cent growth in the period.
Earnings from the home textile export in July-September of FY20 fell by 11.67 per cent to $179.30 million from $203 million in the same period of FY19.
Export earnings from agriculture products in the first quarter of FY20 fell by 10.03 per cent to $262.57 million from $291.83 million in the same period of FY19.
Export of jute and jute goods increased by 1.84 per cent to $220.85 million from $216.87 million.
Export earnings from frozen and live fish decreased by 9.08 per cent to $125.20 million while the shrimp export fell by 11.49 per cent to $100.05 million in the first quarter of FY20.
Export earnings from engineering products in July-September of FY20 grew by 23.37 per cent to $93.02 million from $75.40 million in the same period of last fiscal year, the EPB data showed.