Bangladesh export earnings dip again as COVID second wave continues in US, Europe

Bangladesh’s export earnings have plummeted once again due to the coronavirus pandemic as a second and larger wave of infections has continued to shatter its major markets in the West.

Abdur Rahim Harmachi, Chief Economics Correspondent, bdnews24.com

The country has exported goods worth $3.31 billion in December with a 6.11 percent year-on-year drop and missing the target by 6.13 percent.

The drop in the last month of the year also contributed to an overall 0.36 percent fall in exports to $19.23 billion in the first half of 2020-21 fiscal year. Before December, the exporting industries had a 1 percent growth in the first five months of the financial year.

The export earnings in the six months from July to December missed the target by 2.25 percent.

Readymade garments contributed $15.54 billion to the total of export earnings of this period, according to Export Promotion Bureau data. The total exports figure in the sector missed the target by 4.12 percent with a 3 percent year-on-year fall. 

Women work in a garment factory (File Photo)

A nearly 4 percent growth in cheap knitwear exports contributed $8.52 billion to the earnings from the apparel sector, while overseas sales of woven products plummeted by 10.22 percent to a little over $7 billion, missing the target by 14.39 percent.

The pharmaceutical sector posted a 17.15 percent growth and jute 30 percent while export of handicraft increased by 48.7 percent.

But earnings from leather and leather products fell by 17 percent, and frozen fish 3.71 percent.

Bangladesh’s readymade garment manufacturers hoped exports would boost by December, buoyed by a surge in the demand in the Western world ahead of Christmas, after a huge slump in the early months of the pandemic.

Their expectations were hit heavily when export earnings slipped back into the negative territory with the second wave of coronavirus infections surging in Europe and the US.

Finally, exports returned to growth on cheap knitwear amid hopes raised by the roll-out of coronavirus vaccines in the West.

After the pandemic began in China in late 2019, Bangladesh’s export earnings dipped to as low as $520 million, including $360 million of the apparel industry, in April 2020.

Export earnings rebounded somewhat in May, growing almost three times over the April receipts, as factories began reopening with relaxed restrictions. But it still marked a 61.56 percent year-on-year drop.

Exports bounced back to grow in July and continued the trend steadily in the following two months, beating the targets. A subsequent slump in October was followed by another spell of growth in November.

“People in the US and Europe aren’t buying things that are not essential after being hit by the second or third wave of COVID-19. It seems that this negative trend will continue until the situation normalises,” said analyst Ahsan H Mansur.

He, however, sees no reason to be worried as Bangladesh has been able to keep the drop in exports to as low as 0.36 percent amid the pandemic crisis after a 17 percent fall in the last fiscal year. “The negative trend had been there before the pandemic hit,” he said. 

Anwar-Ul-Alam Chowdhury Parvez, a former president of Bangladesh Garment Manufacturers and Exporters Association, also thinks the situation in the country’s export will continue for several more months.

“The buyers have products in their stocks due to plummeting sales amid lockdowns in several countries. I think orders will drop further in future,” said Mohammad Hatem, vice-president of Bangladesh Knitwear Manufacturers and Exporters Association.  

The government has set an export target of $48 billion in the 2020-21 fiscal year aiming a 19.79 percent year-on-year growth.