Covid-19 and Decline in Exports of Readymade Garments of Bangladesh
Md. Nazmul Ahshan Sawon
Department of Textile Engineering,
BGMEA University of Fashion and Technology
Email: n.a.sawon0007@gmail.com
Introduction:
The Bangladesh economy remains highly dependent on the readymade garments industry for manufacturing employment, foreign reserve, and women empowerment. The industry contributes 11.2% to the gross domestic product of the country. More than 4,600 RMG factories constitute the largest industrial sector in the country and contribute to 36% of manufacturing employment engaging 4.1 million workers. Over the last three decades, the RMG exports have registered a cumulative average growth of 14.8% per annum reaching 34.133 billion USD in the year of 2019 which was 84.2% of the country’s total exports. (BGMEA, 2020)
The COVID-19 virus made a huge decline in global exports of Readymade Garments (RMG) and as well as Bangladesh. To flatten the coronavirus spread curve, the government declared nation-wide holidays up to 25 April 2020 and business and industrial activities have come to a grinding halt except emergency services. Industry people faced a great loss since the outbreak of COVID-19 pandemic in March, according to industry owners it was because, comprising orders that were put on hold or cancelled in the previous months following the outbreak of the Covid-19 pandemic.
Fall of RMG Exports Due to Covid-19
The impact on the RMG industry will not be limited to itself and might have grave repercussions on other industrial, consumer and service sectors. The value addition in the RMG industry has increased gradually and stands at 63.2% as backward-linkage industries developed.
Since the detection of the first corona infection in the country on March FY 2019-20, apparel exports recorded the highest negative growth of over 82 percent in April, as production in most apparel units remained suspended due to the pandemic-induced lockdown.
From below “RMG export” chart we can find out export of RMG product of Bangladesh RMG industries of last decade.
(Click on image for large size)
According to the BGMEA data, in the above chart we can see that Bangladesh’s RMG export earnings of last decade in FY 2004-05 it was 6.41 Billion USD. This was followed by a steady increase RMG export earnings in the following years, such as RMG export earnings in FY 2005-06 it was 7.90 billion USD, in FY 2006-07 it was 10.699 billion USD and in FY 2007-08 it was 10.69 billion USD. In this way, it continues to grow till the fiscal year 2018-19, in FY 2018-19 RMG export was 34.133 billion USD. But due to Covid-19, this growth has stopped in FY 2019-20 and RMG exports have declined and in FY 2019-20 RMG export decreased to 27.949 billion USD. (BGMEA, 2020)
Now from the “Apparel Export Trend” chart, we have month wise report. We can compare the trend of garment exports in FY 2018-19 and FY 2019-20.
(Click on image for large file)
The country fetched 2.25 billion USD, 0.37 billion USD, 1.23 billion USD, 2.24 billion USD and 3.24 billion USD in March, April, May, June and July respectively of this year, representing a decline of 20.14 per cent, 85.25 per cent, 62.06 per cent, 6.63 per cent and 1.98 per cent during the months between March and July of this year over the corresponding months of last year (BGMEA, 2020). The positive development came after seven months of consecutive negative growth since January 2020.
The industry people, however, are not in an upbeat mood as the most shipments, according to them, comprise orders that were put on hold or cancelled in the previous months following the outbreak of the Covid-19 pandemic. RMG exports was last recorded a positive growth of 1.26 per cent in December 2019, according to BGMEA data. The garment export earnings in August stood at US$3.24 billion, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) data (Monira, 2020).
In a press conference former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Fazlul Hoque, said, “The good thing is that the growth has returned to positive territory” (Monira, 2020).
From the Apparel export trend chart, we can understand that the trend of RMG export of Bangladesh has changed a lot due to Covid-19. To accurately determine this change, we divide RMG exports into two-export sectors, woven and knit exports.
(Click on Image for large file)
From the “Woven Export” chart we can compare the last three financial years woven export of the Bangladesh RMG Sector. In this chart, we can see the average woven export of FY 2018-19 was higher than the last two FY 2019-20 and FY 2020-21. And till December of FY 2020-21 the average woven export of FY 2020-21 was lower than FY 2018-19 and FY 2019-20. From the chart we can find that in April- May of FY 2019-20 was very low of that FY. And the reason behind this effect was Covid-19 pandemic. Woven export of Bangladesh RMG sector also suffering to Covid-19 as a result woven export of October FY 2020-21 was lowest of last decade, and it was only 0.098 billion USD. (BGMEA, 2020)
(Click on Image for large file)
Despite the decline in readymade garments exports, a positive aspect is that this year’s Knit exports are much better than last FY. From the Knit Export chart, we can compare the Knit exports of FY 2018-19, FY 2019-20 and FY 2020-2021.
In this chart, we can see the average Knit exports of FY 2018-19 were higher than FY 2019-20 but the average knit export of FY 2020-21 till December 2020 was higher than past FY knit export. Due to the Covid-19 epidemic, Knit Exports suffered temporary losses that only existed during the two months of (April and May) FY 2019-20. And in the following months, it continues to grow. Thus, it can be said that RMG exports have suffered due to Covid-19, but in the case of Knit sector, it has suffered temporary losses.
Conclusion:
In the conclusion, by describing all the charts we can say that due to COVID-19 exports of readymade garments of Bangladesh had a great decline in FY 2019-20. Again, from the woven export and knit export chart we can say, Although the Knit export was able to return to its previous state, but till December of FY 2020-21 woven export has not been able to cope with the Covid-19.
In other away we can also say the impact of COVID-19 was unfolded and evolve fast in FY 2019-20. The full impact was more visible in the month of April-May. This effect lasted till August 2020 and from the next month, of FY 2020-21 our RMG export is again trying to gain their previous position.
Finally, the good news is that the positive growth of RMG sector of Bangladesh is finally gaining ground in export after the disaster of Covid-19 and experts also believe we will soon return back to our glorious days of RMG in 2021.
Reference:
Bangladesh Garment Manufacturers and Exporters Association (July 2020). TRADE INFORMATION, Bangladesh’s RMG Exports to the World. Retrieved From https://www.bgmea.com.bd/export-performances/4
Monira, M. (2020, September 01). Bangladesh RMG exports again in positive territory. The Financial Express. Retrieved From https://thefinancialexpress.com.bd/economy/bangladesh/rmg-exports-again-in-positive-territory-1598930236
Founder & Editor of Textile Learner. He is a Textile Consultant, Blogger & Entrepreneur. He is working as a textile consultant in several local and international companies. He is also a contributor of Wikipedia.
Great article.
How do you assess the impact of current shipping crisis on the RMG exports from Bangladesh?