Bangladesh's apparel export to the United States ebbed down during the first half of this year apparently as global economic slowdown, high inflation and rising interest rates dampened consumer demand.
The ongoing sluggish economy induced by the twin crises of the Covid pandemic and the Russia-Ukraine war has left the retail stores in the USA--Bangladesh's single-largest export destination--with inventory glut that restrains the buyer from placing new orders, according to a trade account from the US side.
This has caused an export slump both in terms of value and volume, industry-insiders have said.
Bangladesh's readymade garment exports fetched US$3.82 billion during the January-June period from America, marking a 23.55-percent fall, according to the data released on August 08 by OTEXA, an affiliate of the US Department of Commerce.
The earnings were $5.0 billion during the corresponding period of last year.
The shipments witnessed a similar trend with a negative growth of 33.43 per cent to 1.17 billion square metres, down from 1.76 billion square metres in the corresponding period of 2022.
And overall US apparel imports also declined by 23.17 per cent to $38.04 billion from $49.52 billion in H1, 2022.
Under the overall economic downswing, Bangladesh, however, did a bit better than its competitors in clothing export. China and Vietnam counted contractions by 29.16 per cent and 26.73 per cent respectively during the period under review, OTEXA showed.
Apparel exporters and experts cited a sluggish demand amid economic slowdown, high inflation and rate rises in the USA as factors affecting the trade.
Industry-insiders say Bangladesh still is in a relatively better position compared to other competitors that suffered a decline in exports at higher percentages.
Bangladesh also benefited from "the US buyers' shift from China, and China-plus policy", they added.
But the Russia-Ukraine war has dented the demand, resulting in the high levels of inventories held by the buyers and reduced work orders in recent months.
According to a latest study by the United States Fashion Industry Association (USFIA), Bangladesh offers the most competitive prices and US buyers rated the country at 4.5 out of 5.0 while China, Vietnam, India and Cambodia rated 3.5.
Regarding Asia-based suppliers, Vietnam, Bangladesh and India are among the most popular destinations where respondents plan to increase sourcing over the next two years.
Talking to the FE, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) vice-president Md Shahidullah Azim said, "Geopolitical crisis, economic slowdown and huge inventory fuelled by high inflation and interest rates have eaten into the demand for apparel."
Bangladesh received 30-40-percent less work orders for the last several months due to the buyers' huge inventory mainly because of high inflation and interest rates over there.
Regarding Vietnam, he said the country produces high-value-added items that receive high value.
A number of exporters who directly export to the US market say such a negative trend might continue until September.
Buyers are placing orders for shipments in October and onwards ahead of their (US) festivals like Christmas and New Year celebrations, they said, adding that the US buyers' stock position had also started declining.
The Chinese share in the US market is decreasing due to trade tensions between the two countries, Chinese zero-Covid policy and the Uyghur issue, exporters say.
China's share in the US apparel market was 37.32 per cent in 2013, which fell to an estimated 21.75 per cent in 2022, while Bangladesh's share in the trade cake rose to 9.75 per cent last year from only 6.20 per cent in 2013.
During the January-June period of 2023, the US imported apparel worth $7.27 billion from China, which was $10.26 billion during the corresponding period of 2022.
Vietnam exported apparel items worth $6.73 billion during the period under review, in a fall from $9.19 billion in the corresponding period of 2022.
Meanwhile, US apparel imports from India during the period witnessed a negative growth of 21.50 per cent to $2.51 billion while Cambodia recorded 32.27-percent negative growth having earned $1.46 billion.
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