Some challenges ahead for garment sector: BB

The garment sector may face some challenges in the days ahead due to persistent global trade tensions and economic slowdowns in export destinations, according to Bangladesh Bank.

Garment exports maintained decent growth during the outgoing fiscal year of 2022-23, as per the central bank's quarterly review of the sector for January-March 2023 released yesterday.

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Bangladesh earned $12,255.75 million from garment exports in the January-March period of 2023, which was 0.77 per cent higher than the commerce ministry's target for the quarter and 6.32 per cent higher than that in the corresponding period of the previous year.

However, this was 3.67 per cent lower than that of the previous quarter owing to sluggish growth of the world economy.

Bangladesh's overall garment export earnings stood at $42,613.15 million in fiscal year 2021-22, which was 35.47 per cent higher than that in the previous fiscal year.

In fiscal year 2021-22, the sector contributed 9.25 per cent of the gross domestic product (GDP).

Woven garments and knitwear contributed 40.10 per cent and 44.95 per cent respectively of the total garment export earnings during the quarter under review.

The main destinations of Bangladesh's garment exports are the US, UK, Netherlands, Germany, Spain, France, Italy, Canada and Belgium.

During the quarter, total export earnings from these nine countries stood at $9,123.67 million.

Of this amount, 92.20 per cent, or $8,412.46 million, was earned from garment exports (woven 45.45 per cent and knitwear 46.75 per cent).

However, the earnings were a decrease of 6.74 per cent and 0.11 per cent compared to that of the previous quarter and that of the corresponding quarter of the preceding fiscal year respectively.

The garment sector of Bangladesh was making a fairly good turnaround in the post Covid-19 period.

However, the start of the Russian-Ukraine war in late February of last year and its resultant supply chain disruptions, high global inflation and tight monetary policy of the Federal Reserve have created some challenges in recent months.

"However, to face different corresponding challenges and to accelerate the export growth of RMG, we should focus on inter-apparel diversification, increase productivity, efficiency and product innovation," the review said.

At the same time, Bangladesh should prioritise exploring new global markets. Moreover, emphasis should be given on skills development of the garment workers for facing potential challenges and harnessing available benefits of this sector, it said.

The government and Bangladesh Bank have taken a number of measures, especially for facilitating production and export of the garment sector.

For instance, the central bank has formed a refinance fund worth Tk 50 billion, from which entrepreneurs can take loans through banks at 6 per cent interest rate, said the review.

Bangladesh Bank has expanded the tenure of loan facilities for entrepreneurs from 1 year to 3 years under this refinance scheme, it added.