After recovering swiftly from the havoc caused by the COVID-19 pandemic, Bangladeshi garment manufacturers are now anticipating a slowdown as sales at key customers such as Walmart are hit by a spike in inflation, reports Reuters.
The garments industry accounts for more than 80 per cent of total exports for Bangladesh, which on Sunday became the third South Asian country after Pakistan and Sri Lanka to seek a loan from the International Monetary Fund as its foreign exchange reserves shrank and the trade deficit jumped.
Bangladesh's $416 billion economy has been one of the fastest-growing in the world for years, but rising energy and food prices because of the Russia-Ukraine war have inflated its import bill and the current account deficit.
Walmart, a US bellwether for the retail sector that caters to cost-conscious shoppers, cut its full-year profit forecast on Monday and pledged to reduce prices of clothing and general merchandise more aggressively than it did in May to reduce a spring backlog.
"Orders have slowed down," said Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
"Western countries are raising bank interest rates. That's why people are giving priority to food and mortgages. Demand for clothing is less. This will hamper our export."
Bangladesh's garments exports last shrank in July 2021 when COVID-19 cases were high around the world. Since then, sales have surged, growing by a multi-month high of 60 per cent year-on-year in March this year and 41 per cent in June, according to BGMEA data.
Apparel exporters brace for slowdown as inflation bites
US buyer Walmart pledges to reduce prices of clothing
FE Team | Published: July 28, 2022 00:10:07
Apparel exporters brace for slowdown as inflation bites
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