Slow global demands lead to poor growth in export earnings

The export earnings from Bangladesh’s Ready-made Garment industry have fallen in the first ten months of FY 2016-2017 (July-April), a study by Centre for Policy Dialogue revealed.

The report “State of the Bangladesh Economy in FY2016-17: Third Reading” said that the RMG export earning fall led to volatility on the total export earnings on a month-on-month basis.

The report was released on Saturday (May 27).

The report said that exports have experienced a general declining growth in the second and third quarters while the export growth has been half of what was targeted.  According to the report, the growth in the first ten months was (-) 3.9 per cent as against annual target of 8 per cent set out for FY2016-17.

Figure 1: Month-on-month Growth of RMG and Non-RMG Products for July-April FY2017

The report pointed out that non-RMG export growth (month-on-month) has been higher than RMG exports. However, it also said that since RMG exports are the major contributor of the total export earning of Bangladesh (80.6 per cent for July-April FY20174), the 11.7 per cent period-on-period growth for July-April FY2017 for the non-RMG export earning was unable to raise total export growth significantly.

The report observed that achieved growth has fallen short of target for RMG (2.2 per cent in the face of a target growth of 8.1 per cent).

Table 1 : : Country-wise and Year-wise Comparison of Per Unit Woven and Knit Items in US
Market and EU Markets

“At a more disaggregated level, for both knit and woven RMG. Intra-RMG growth composition shows that woven export earnings have incurred negative growth in July-April FY2017 period when compared with earnings of July-April FY2016 when this was 12.7 per cent,” the report reads.

It said that both Knit and Woven-apparels recorded negative growth of -7.1 and -6.7 per cent for the period of July April FY 2017 relative to same period in previous fiscal year.

The CPD report revealed that exports to the US market has remained in the negative terrain and recorded a growth of (-) 5.2 per cent for the period of July-April FY2016.

“In the month of April, export growth to US was 2.5 per cent, positive performance after two successive quarters. During the July-April period, RMG and non-RMG exports to US recorded growth of (-) 6.8 per cent5 and 9.9 per cent respectively,” the report reads.

The report said that Vietnam is the only country from which US imports of RMG has increased in 2016 (growth rate 2.5 per cent). It said that Vietnam’s export performance in the US market has been consistently better than Bangladesh as also in comparison to other countries through all the observed years (in Table 3.1). Regarding Bangladesh’s export to the EU market, the report said that growth of RMG imports by the EU has fallen drastically from 10 per cent in 2015 to 0.1 per cent in 2016, with China and Vietnam being the hardest hit. It said that Bangladesh performed better than the World average with growth of imports from Bangladesh being 8.2 per cent.

“However, Cambodia has been the frontrunner in the EU market with growth of 14 per cent in 2016. As may be recalled, in the EU market, export performance of Bangladesh received a boost in 2012 due to the relaxation of rules of origin (RoO) requirement from two-stage to single-stage processing,” it reads.

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