Exporters brace for lower exportearnings in current fiscal year

Nizam Ahmed The country may not achieve its export target of $26.3 billion in the current fiscal year up to June 2012 due to the fresh global slowdown emerging from Europe's debt crisis, experts and traders said on Thursday. The Export Promotion Bureau (EPB) has set the export target, which is 15 per cent higher than the target of $18.5 billion in the previous fiscal (2010-11). The country's total exports reached a record $22.92 billion, including $17.90 billion fetched by ready-made garments (RMG), in the FY 2010-11. The total export earning in FY 2010-11 was 41.5 per cent higher than the previous fiscal and earning from RMG during the same period was 43 per cent higher. "However this time the garments industry is fearing a lower export to EU countries due to the prevailing fund crisis in the Eurozone," Nasir Uddin Chowdhury, vice president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) told the FE. He said the industry received lesser purchase orders from Europe over the last couple of months, compared to the earlier months', but he did not give any figure saying, "The real impact will be assessed in the coming months." The country's exports rose at a slow pace in the first quarter of the current FY compared to the corresponding period of the last FY as Europe's deepening debt crisis resulted in a reduced demand, exporters said. The exports in the July-September period were worth $6.16 billion, against a target of $6.26 billion. The exports in the first quarter were 22.56 per cent lower than the exports in the corresponding period of the last FY, according to EPB data. The exports are likely to decline further in the coming months as the European debt crisis is feared to trigger a global slowdown, financial experts said. "The European crisis will have a negative impact on our garment exports," Prof. Mustafizur Rahman, executive director of the Centre for Policy Dialogue (CPD) told the FE. "However, the export crunch may not be that harsh as our big European buyers like Germany, Britain and France are likely to stay free from the crisis," the head of the private think tank added. The debt crisis developed in Greece in 2009, engulfed Ireland, Italy, Spain and Portugal, and also some non-Eurozone EU countries in 2010. According to the EPB statistics, the knitwear sector fetched nearly $2.57 billion in July-September this fiscal, registering an 18.26 per cent growth over the corresponding months in the previous fiscal. EPB officials said earnings from the major sectors such as knitwear, woven garments, frozen fish, jute and jute goods also slowed down mainly due to the recent global 'economic meltdown'. Export earnings from woven garments totalled $2.23 billion, marking a rise of 24.82 per cent. It is 1.12 per cent lower than the target set for the period. During July-August, knitwear and woven garment sectors' earnings grew by 29.64 and 33.54 per cent respectively. In the EU, especially in the countries where sovereign debts have increased sharply owing to bank bailouts, a crisis of confidence has emerged with the widening of bond yield spreads and risk insurance on credit default swaps between these countries and other EU members, most importantly Germany, media reports said. The European crisis has started to affect big economies. It has lowered the earnings of the largest US automaker by 15 per cent to $1.7 billion in the third quarter from $2 billion a year earlier, a recent Bloomberg report said. Similarly, China's exports rose at the slowest pace in nearly two years in October. Chinese exports slowed in October, prompted by the mounting woes in Europe, but strong imports served up a reminder of the domestic economy's strength. Chinese exports rose 15.9 per cent year-on-year, down from 17.1 per cent a month earlier. Imports increased 28.7 per cent, accelerating from a 20.7 per cent pace. China's trade surplus still widened to $17bn from $14.5bn a month earlier, though that was well below market expectations for a figure closer to $25bn., Bloomberg said.