Readymade garment (RMG) exports to the USA suffered a setback during the first quarter (Q1) of 2023 due to an economic downswing as shipments fell both in terms of value and volume.
Bangladesh fetched $2.13 billion during January-March period of 2023 from the single-largest export destination, marking a 13.33 per cent fall, according to the data available with OTEXA, an affiliate of the US Department of Commerce.
The earnings were US$2.46 billion during the corresponding period of last year.
The overall US apparel import in the last three months of the current calendar year, however, has also declined by 19.73 per cent to $19.47 billion.
It was $24.25 billion during the January-March period of 2022.
Meanwhile, China and Vietnam – the key competitors of Bangladesh – also fell by 34.89 per cent and 24.25 per cent respectively during the same period under review, OTEXA showed.
Apparel exporters and experts attributed a sluggish demand fueled by an economic slowdown, high inflation and high interest rates in the USA to this decline.
Industry insiders say Bangladesh still is in a relatively better position compared to other competitors that suffered a decline in exports at a higher percentage.
Bangladesh also benefitted from the US buyers’ shift from China and China-plus policy, they said, adding that the Russia-Ukraine war has affected the demand, resulting in the high inventory of buyers and reduced work orders in recent months.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) director Mahmud Hasan Khan said that overall US imports have fallen because of an economic slowdown, high inflation and high interest rates there.
As a result, the demand for RMG items declined, the managing director of Rising Group told the FE, adding that such a trend might continue until August next.
He further said that at present Bangladesh is passing through a ‘fierce’ competition with its major competitors as all are trying to bag the shifting orders.
“We were receiving 30-40 per cent less work orders for the last several months due to the buyers’ huge inventory mainly because of high inflation and interest rates there,” executive president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Md Hatem said.
Despite the sector maintained a growth until February mainly because of production of value-added items and high raw material prices that pushed up the value of the products, he said the exports in terms of quantity have fallen significantly.
The OTEXA data for the Q1 also showed the same trend as the shipments witnessed a negative growth of 26.83 per cent to 665.45 million square metres from 909.49 million square metres in Q1 of 2022.
Talking to the FE, Brothers Fashion Ltd managing director Abdullah Hil Rakib attributed the US economic turmoil to stunted job growth while many are retrenched and IT people are losing jobs.
Such a situation is shrinking the demand, especially for apparel, and restricting consumers towards cautious purchase, said Mr Rakib, also a BGMEA director. The US retailers bought huge quantities last year and they have a huge stock now, he added.
“This is the main reason behind the local RMG sector performance,” Mr Rakib said, adding that the situation might change with the revival of the US economy.
Apparel exporters, however, said the global demand is falling mainly because of an adverse impact of the Russia-Ukraine war.
Chinese share is decreasing due to a trade tension between the two countries, Chinese zero-Covid policy and the Uyghur issue, they added.
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, according to the data.
On the other hand, Bangladesh’s share rose to 9.75 per cent last year from only 6.20 per cent in 2013.
During the January-March period of 2023, the US imported apparel worth $3.46 billion from China, which was $5.32 billion during the corresponding period of 2022.
Vietnam exported apparel items worth $3.36 billion during the period, which was $4.44 million in the corresponding period of 2022.
Meanwhile, US apparel imports from India during the period witnessed a negative growth of 32.56 per cent to $1.33 billion while Cambodia recorded 32.56 per cent negative growth and earned $727 million.
Munni_fe@yahoo.com
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