Remittance inflow, RMG export to fall further Economic shocks likely to increase

Al Amin :
Economic shock is likely to increase as the pace of remittance inflow and apparel exports are slowing down further in current month (October) falling stress on foreign currency reserves.
The readymade garment export, around 84 per cent contributor to the country’s national export earnings, has declined by 27.06 per cent year-on-year in first nine days of the current month.
The apparel sector managed to earn $758.32 million in the nine days, which was $1039.68 million in the same period of last year (2021), according to a data of Bangladesh Garment Manufacturers and Exporters Association (BGMEA). The slowdown is mainly for falling demand in USA and European markets due to the fear of economic recession caused by Russia-Ukraine war.
BGMEA Vice-President Md Shahidullah Azim told The New Nation over phone on Tuesday, “The ongoing Russia-Ukraine war is taking a toll on the RMG export, which just started to recover from the pandemic.”
“We said a few months ago that our orders are going down, our growth will be negative from September. The domestic issues like power rationing, load shedding, severe gas crises also impacted the sector,” he added.
BGMEA Director Md Mohiuddin Rubel said, “Buyers are taking cautious steps to optimize their inventory and supply chain. Some of them are even holding back production and orders as retail apparel sales have fallen down to cope with the increased foods prices in our major export destinations.”
“The export data has reflected it and the situation may continue for few more months depending on the depth of the Russia-Ukraine war,” he said.
On the other hand, the inflow of remittances through legal channels is slowing down. The expatriates sent remittances to the country $357 million in the first six days of October, according to Bangladesh Bank data.
The remittance inflow to the country dropped around 25 per cent in September to $1.54 billion compared to August earnings making it the lowest in seven months.
Exports fell 6.25 per cent year-on-year to $3.9 billion in September while remittances dropped 11 per cent year-or-year.
Dr Zahid Hussain, former lead economist of World Bank Dhaka office, said, “I believe that fixing the different rates of dollar has had a big impact on remittance.”
“And the fall in apparel export earnings is disappointing but not unexpected as the world economy is not in a good shape,” he said.
Meanwhile, the overall import payments, however, swelled 26.5 per cent to $20.69 billion in the first three months (July-September) of the fiscal year, according to the provisional data from the BB.
Owing to the poor show of the export and remittance sectors, the country’s foreign exchange reserves fell to $36.44 billion on September 28, down 21.25 per cent from a year earlier.
The reduced exports have made it clear that recession fears and higher inflation in Europe and the US have started to affect exports.
As export receipts were lower than imports in July and August, Bangladesh suffered a trade gap of $4.55 billion.
Similarly, the deficit in the current account, which shows transactions in goods and services by a country with the rest of the world, grew to $1.5 billion.