For the last couple of years, Bangladesh is trying to increase its export destinations beyond traditional West Europe and North America. These two regions attract the country's 80 per cent exports while emerging markets have got attention for the last one and half decades. The latter markets, mostly comprised of advanced and big developing countries, have created a hype led by BRICS (Brazil, Russia, India, China and South Africa). Bangladesh has started to tap these markets.
Total global export of Bangladesh stood at $34.24 billion in the last fiscal year (FY16), registering 9.72 per cent growth over the previous fiscal year (FY15). In fact, annual export significantly bounced back in the last fiscal year while in FY15, the export earnings registered a mere 3.4 per cent growth. Exports in the emerging market, however, didn't grow at a similar rate in the last fiscal year.
GLOBAL TREND: According to the World Trade Statistical Review 2016, released by the World Trade Organisation (WTO) last week, growth in the volume of world merchandise trade remained sluggish in the last year, at 2.7 per cent measured by the average of exports and imports. The report pointed out that economic slowdown in China and recession in other large developing or emerging countries, including Brazil, are the two major factors for stagnation in the growth of global trade. 2015 was the fourth consecutive year when trade volume grew below 3.0 per cent and the fourth year in a row with trade growing at a nearly the same rate of global GDP (Gross Domestic Product).
The dollar value of the global merchandise trade, however, declined sharply by 13 per cent from $19 trillion to $16 trillion in 2014.
The report also mentioned that the outlook for the world economy and trade would remain subdued in 2016. The International Monetary Fund (IMF), in its latest forecast of the global economy released last week, said that the growth of world Gross Domestic Product (GDP) would be 3.1 per cent this year and                               3.4 per cent next year while the growth rate was 3.1 per cent in 2015. IMF said that "the unexpected U.K. vote to leave the European Union (EU) creates a wave of uncertainty amid already-fragile business and consumer confidence."
BD EXPORT: Bangladesh's combined exports to selected nine emerging market economies (Argentina, Brazil, China, Indonesia, India, Mexico, Russia, South Africa and Turkey) increased slightly in the last fiscal year (Chart-1). But the ratio is still very low compare to global export. The ratio actually declined from 9.0 per cent in FY15 to 8.54 per cent in FY16 while the ratio was 9.2 per cent in FY14.
The share of combined exports in this selected emerging markets declined in FY15 even after the increase of export earnings in value terms. The trend continued in the last fiscal year. Though out of the nine countries exports in only two countries declined, the decline was sharp. According to the Export Promotion Bureau (EPB) data, Bangladesh's export to Brazil declined by 33 per cent from $203.5 million in FY15 to $135.6 million in the last fiscal year. Brazil economy is going through a turbulent time and the latest political instability makes the future more uncertain. Impeachment of President Dilma Rousseff made the whole political landscape more complex. The country's economic output dropped by 3.8 per cent last year after posting a mere 0.1 per cent growth in 2014. International Monetary Fund (IMF) has projected that Brazil's GDP would decline by another 3.3 per cent in this year and may turn around marginally by 0.5 per cent in 2017. As a host of the FIFA world cup football tournament in 2014, Brazil failed to make an optimal return of its huge investment. The same may happen this year with the hosting of the Olympic Games when the country is also facing a Zika virus epidemic. Thus, aggregate demand may decline in the coming days. Â
Bangladesh's export to Turkey also declined by 8.2 per cent in the last fiscal year from $720.9 million in FY15 to $661.9 million while the amount was $856.2 million in FY14. The latest failed coup attempt in Turkey poses a serious threat for the country's economy and growth rate will slow down.
Among the selected emerging markets, export to India posted the highest growth reflecting benefit of India's upward economic growth. Bangladesh export to India stood at $689.2 million in FY16, registering 30.8 per cent growth over the export earnings worth $527 million in FY15.
But export growth to China slowed down to 2.16 per cent while earning stood at $808 million in FY16 which was $791 million in FY15. Slowdown in Chinese economy may be a major reason for lower growth in BD export which posted over 70 per cent growth in FY14. IMF has projected that growth of Chinese economy would be 6.6 per cent in this year and lower down to 6.4 per cent next year (Table).
Exports to Indonesia, Mexico, Russia and South Africa also recorded modest growth in last fiscal year. As Russian economy went through a recessionary phase, 7.0 per cent growth in this market reflects future potential for more export.
MARKETING ANGLE: Exploring emerging markets requires some additional efforts where Bangladesh lags behind. Bangladeshi products are hardly familiar in these markets. Without having any information about these products, it is impossible for the buyers and consumers of those countries to look for Bangladeshi products. Moreover, competition from other countries, especially China and India, already limit the space. Market research is thus essential to know and understand the choices and preferences of different types of consumers in these countries.
'Made in Bangladesh' or Bangladeshi brand is slowly growing in the global market which is helpful for effective marketing. London-based Brand Finance, a leading independent brand valuation and strategy consultancy, in its latest ranking on national brand, put Bangladesh brand value at $144 billion in 2015. It also placed the country among the top 10 'fastest growing nation brands' list. So, manufacturers and exporters have to invest on marketing and branding as middle-class consumers in the emerging markets are increasing. Negotiations for tariff elimination and removal of non-tariff barriers need to be supplemented by marketing initiatives. Despite slowdown in growth, these markets will continue to grow.
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Exploring and expanding business in emerging markets
Asjadul Kibria | Published: July 28, 2016 00:00:00 | Updated: February 01, 2018 00:00:00
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