Global inflation, Red Sea crisis hurt RMG industries

Staff Reporter :
Global inflation and the Red Sea crisis caused by ongoing wars along with the gas crisis in the domestic market have brought the garment industries to their knees, the industry insiders said.

Among the pressing problems that are plaguing the industry, the Red Sea crisis has been diverting the importers to outsource the cheap dresses to nearby countries like Turkey, Brazil etc, they added.

According to the latest data of the Export Promotion Bureau (EPB), the apparel exports declined by 1.24 per cent to $11.36 billion to European Union (EU) and 5.69 per cent to $4.03 billion to US in first six-month (July-December) period of the current fiscal year.

The exporters said the industry has been passing through difficult times since the last six to eight months due to higher inflation in the developed nations caused by the Russia-Ukraine war.

And the latest Red Sea crisis has emerged as a new blow to the industry. Because, it will increase transport cost, which may force buyers to choose near countries for apparel sourcing, they added.

BGMEA Vice-President Md Shahidullah Azim told The New Nation, “Global inflation is mainly reason behind the decline in RMG export. Besides, increase in production cost for growing fuel cost also another reason for the decrease.

“We are still trying to increase apparel exports to the gulf countries. But it is not enough for us as the total market value is only around $12 billion in the middle-eastern countries. So, we have no alternative to giving priority to the western market for the sake better business,” Shahidullah Azim said.

Last year was a dull season for shipment of apparel because of high unsold stock of clothing items in the stores of western retailers and brands followed by high inflationary pressure on the consumers.

The EPB data showed that garment export to the EU declined by 1.24 per cent to $11.36 billion during the six-month period. The apparel export to major EU markets such as Spain, France, the Netherlands and Poland showed growth during the period.

On the other hand, apparel shipment to Germany, the largest export market in the EU, declined by 17 per cent year-on-year to $2.86 billion in the July-December period of 2023-24 fiscal year. Apparel export to Italy declined by 3.89 per cent, the EPB data showed.

Along with the EU region, RMG export to the USA, the single biggest market for Bangladesh, fell 5.69 per cent year-on-year to $4.03 billion in the first six months of the fiscal year. RMG export to Canada grew 4 per cent year-on-year to $741.94 million in the first six months of FY24.

At the same time, garment export to the UK reached $2.71 billion, posting a 13.24 per cent year-on-year growth. However, apparel export to non-traditional markets grew by 12.28 per cent to $ 4.53 billion in the July-December period.

Among the major non-traditional markets, exports to Japan, Australia, and South Korea increased. On the other hand, apparel export to India declined.