Excitement over the growth of emerging markets has been subdued to some extent in recent years. Due to both external and internal factors, most of the emerging market economies are now slowing down. In the updated version of the World Economic Outlook (WEO), released recently, the International Monetary Fund (IMF) also confirmed this. It said that growth in emerging market and developing economies was projected to slow from 4.6 per cent in 2014 to 4.2 per cent in 2015. In 2013, growth in emerging markets and developing economies stood at 5.0 per cent.
The slowdown reflects, as mentioned in the IMF report, dampening impact of lower commodity prices and tighter external financial conditions in Latin America and oil exporting countries. IMF also mentioned that "the rebalancing in China, and structural bottlenecks, as well as economic distress related to geopolitical factors, particularly in the Commonwealth of Independent States and some countries in the Middle East and North Africa" also reflected in lower growth trend of these countries. Â
This is a matter of grave concern for the global economy as emerging markets have been playing important role to spur global growth. IMF also said that global output growth is going to decline slightly to 3.3 per cent this year from 3.4 per cent in last year although growth of advanced economies is projected to increase from 1.8 per cent in 2014 to 2.1 per cent in 2015 and 2.4 per cent in 2016.
Developing countries like China, India and Brazil are known as emerging markets. Some 27 countries are in the IMF's list of emerging market. The Financial Times, Dow Jones, Goldman Sachs and MICS analysts have separate lists of countries tagged as emerging markets. Most of the countries are common in the lists. Generally, countries moving ahead with higher growth and high potential to grow in near future are considered as emerging markets. Five advanced developing countries - Brazil, Russia, India, China and South Africa, known as BRICS - is a popular symbol of emerging markets.
BANGLADESH'S EXPORT: For the last couple of years, Bangladesh is trying to explore the emerging markets by exporting different products. Conventionally, North America and European Union are two major destinations of Bangladeshi products, accounting for 90 per cent of its  exports. The country needs to diversify export destinations. The global financial crisis in 2008 and the following recession have underlined the importance of exploring new markets. The government has also introduced incentive package for exploring new markets.
This is not an easy task and requires additional entrepreneurial effort. New markets have different structures, unknown consumer preference and higher tariff regime which are difficult to overcome. Despite these challenges, a section of Bangladeshi exporters have been trying to access these markets. The response is positive in some instances.
But, slowdown in growth and the consequent lower consumer demand in these economies have some negative effects on exports of Bangladesh. This is reflected in the export statistics for last fiscal year 2014-15 (FY15). It shows that total exports to selected nine emerging markets stood at US$ 2.79 billion in last fiscal year which was $2.76 billion in FY14. Thus overall export to these countries grew by only 1.1 per cent in the last fiscal year. The growth rate was 20.5 per cent in FY'14 against the total export worth $2.29 billion in FY13.
Further analysis of the statistics, released by the Export Promotion Bureau (EPB), showed that ratio of exports to nine emerging markets against global exports in FY13 was 8.49 per cent which increased to 9.16 per cent in FY14 but again declined to 8.97 per cent in FY15.
CAUSAL LINK BETWEEN EXPORT AND ECONOMIC GROWTH: Bangladesh's exports to some of these emerging economies have fluctuated in last three years. So, linking the latest export trend with slowdown of growth of many of these countries is not well substantiated. For instance, Brazilian economic growth slowed down to 0.1 per cent in 2014 from 2.7 per cent in 2013. And it may shrink by 1.5 per cent in 2015, as projected by IMF. But, Bangladeshi export to Brazil declined to $178 million in FY14 from $182.78 million in FY13 and rebound to $203 million in FY15.
Nevertheless, the overall trend reflects some causal link between export and economic growth. For instance, export to China increased by 63 per cent in FY14 and the rate came down to 6.0 per cent in FY15 as the pace of Chinese economy also slowed down. China, however, provides a wide range of tariff preference to Bangladeshi products and there is virtually no Non-Tariff Barriers (NTBs) as it is in the case of India.
Export to India registered 15.4 per cent growth in the last fiscal year after having negative growth of 19 per cent in the year before. India's average Most Favoured Nation (MFN) tariff rate is 13.5 per cent which is quite high. But, Bangladesh gets tariff-free access to all products (except 25 tobacco and alcoholic products). Although tariff barrier has been removed, there are several Non-Tariff Measures (NTMs) some of which appeared as Non-tariff Barriers (NTBs) for Bangladeshi products to India. In fact, after getting the duty-free access to the Indian market in November 2011, Bangladesh exports to India dropped in FY12 by 2.0 per cent from FY11. Exports surged by 13 per cent in FY13 and again declined by around 19 per cent in FY14.
Bangladeshi products are gaining market in Russia but at a slower rate in last year due to decline in Russian economic momentum as a result of the Ukraine crisis.
Slowdown in emerging markets also indicates that Bangladesh has a long way to go to consolidate its position as a growing importer for these countries. Understanding the consumer preferences and devising marketing effort are two important tasks the country's exporters have to accomplish. Otherwise, it will be difficult to rebound strongly after the current slump.
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