Bangladesh garment exports could see 15% growth this year

DHAKA growth in Bangladesh's garment exports could drop to about 15 per cent this year, after an unusually strong expansion of more than 30 per cent in 2021, two industry leaders told Reuters on Wednesday.

The garment industry accounts for more than 80 per cent of total exports for Bangladesh, which is sold to clients such as Walmart, Gap Inc, H&M, VF Corp, Zara and American Eagle Outfitters, some of which have flagged weak sales due to their customers prioritising basics.

The data from BGMEA shows a big jump in exports in a year is typically followed by slower growth in the next.

Fazlul Hoque, managing director of Plummy Fashions and former president of the Bangladesh Knitwear Manufacturers Exporters Association, said he too believed that exports would rise by about 15 per cent this year.

Hoque said that his customers were delaying orders by a month or so and cutting order sizes. One big U.S. client, he declined to name, originally wanted a small shipment that would be delayed until December.

After Plummy warned them about penalties and other charges for holding onto the stock for longer, the client asked for a month's delay.

If they want to delay such small orders for a period of a few months, that means the situation is not really good, Hoque said. They can't accommodate the small volume. There is a concern about rising input costs after Bangladesh raised fuel prices by around 50 per cent on Saturday amid high international prices. Fuel accounts for about 10 per cent of the total cost of garment companies, Hoque said, adding that diesel generators had gone up due to long power cuts.

After the abnormal oil price hike, production costs will go up sharply, said Shahidullah Azim, another BGMEA vice president. We'll have to bear losses for the already placed order. He said exports could grow to between $38 and $40 billion this year - or 6 per cent -- 12 per cent growth - and that the next year could be even worse if the global economy tips into recession. Bangladesh and Sri Lanka became the third south Asian country after the International Monetary Fund as its foreign exchange reserves shrank and the trade deficit went up.