Inflation in EU countries slows RMG orders22 May 2022
Al Amin :
Rising inflation caused by Russia-Ukraine war in European countries has slowed garment export orders.
The country's apparel export to the major apparel export destinations is likely to decline by at least 10 to 15 per cent as the buyers are moving forward cautiously in placing orders.
Inflation in the eurozone hits a new record as the war in Ukraine takes a toll on the European region's economy.
Under this situation, the buyers have started to delay shipment as the demand for clothes in the countries has dropped significantly, the entrepreneurs of the RMG industry said.
"The buyers have started to rein in purchasing orders by postponing orders as the pace of selling clothes in the outlets in EU countries has slowed down a bit," Mohammad Hatem, Executive President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) told The New Nation on Saturday.
"Apparel shipment is delaying. Payment will also be delayed. On the other hand, having production scheduled fixed, we have no option to bring change in it. Resulted, the factory owners may fall into financial crisis again," Hatem said.
Some buyers are also reducing the promised purchase orders and the garment exports after July are expected to decline a slight, he added.
Earlier, speaking at a press conference BGMEA President Faruque Hassan expressed concerns at the alarming rise in global inflation, citing that increasing prices may affect the purchasing power of end-consumers in export destinations and cause demand for garment items to fall.
According to Export Promotion Bureau (EPB) data, RMG exports were recorded $35.362 billion in the first ten months of the current fiscal year, which was 35.98 per cent higher than the corresponding period of the last year. The export is expected to cross $41 billion at the end of the year.
The apparel export recorded $31.45 billion in last fiscal year. Of the amount, 61.77 per cent was exported to EU countries and 18.90 per cent to USA.
On the other hand, the US market accounted for 21.16 per cent, EU 50 per cent and UK 10.69 per cent of total garment exports in the first 10 months of the current fiscal year, according to the EPB data.
Md Akhter Hossain Apurbo, Vice-President of BKMEA, said, "We have sufficient orders to run our factories till June. But many EU buyers are now taking partial shipment as unit price has increased due to devaluation of Euro, EU currency, against US dollar."
"The purchasing orders may slow down after July, if the inflation increases further and the Russia-Ukraine war prolongs," he said. "The buyers are also cautiously moving forward in negotiating prices," he added.