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War-driven economic recession

Apparel exporters worried about fall in orders

24 September 2022


Staff Reporter :
The country's apparel manufacturers are very much concerned for decline in orders of shipment due to the ongoing war-driven economic recession in major destinations.
The readymade garment industry, the main export earning sector of the country, is suffering due to Covid-19 pandemic, increase in prices of raw materials and fuel oil price caused by Russia-Ukraine war, cancellation of shipment orders by many reputed global brands and gas-electricity crisis.
Many buyers are either cancelling or withholding shipment orders. On the other hand, buyers are not buying clothes at the previous price.
The production capacity of factories may not be utilised more than 30 per cent in coming days, if the situation continues, the entrepreneurs said.
Shahidullah Azim, Vice-President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said that the export situation of ready-made garments has been deteriorating since the beginning of the Russia-Ukraine war.
"Export orders usually have a cycle of every six months. The shipment, done in last two months, was being ordered a few months ago. Few new export orders are now in hand. Many buyers have postponed export orders," he said.
"Buyers are reluctant to take produced goods and due to these reasons, some factories may be closed down. Some factories are trying to survive by producing at half of their capacity," Shahidullah Azim added.
The industry has already witnessed more than 12 per cent year-on-year negative growth in the first 18 days of September breaking record growth in last 13 months.
The readymade garment sector, around 84 per cent contributor to the national export, earned $1.72 billion in the 18 days,    
which was $1.96 billion during the  corresponding period of the last fiscal year, according to the BGMEA.
Industry people have put this fall in export receipts down to record inflation in the sector's major destinations fuelled by the ongoing Russia-Ukraine war.
In the face of reduced consumer demand, a number of retailers, including Walmart, have already cancelled some orders. Besides, some buyers are requesting exporters to delay shipments or suspend orders ready for delivery.
Apparel exporters said, the slowdown of apparel shipments was expected from August this year as most factories have been facing a fall in work orders, which is being reflected in export earnings.
They also fear that it might continue till April-May next year.
Mohammad Hatem, Executive President of the Bangladesh Knitwear Manufacturers and Exporters Association, told The New Nation, "The industry is experiencing a slowdown as retailers are stuck with too much inventory at their stores."
The ongoing economic recession caused by Russia-Ukraine war has impacted on the country's apparel industry severely. We are now facing up to 30 per cent shortage of orders for regular items and up to six per cent for fashion items, which may continue for six to seven months," he said.

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