A crucial pillar of Bangladesh’s economy, the Ready-Made Garment (RMG) industry, confronts a significant setback. RMG exports to the United States, a key market, have dwindled persistently over recent months. The root of this decline is a reduction in sourcing by American retailers, driven by escalating inflationary pressures.
US consumer spending, particularly on discretionary items like apparel, slowed considerably last year. This led to a buildup of unsold inventories, impacting Bangladesh, the prime export destination for these products.
Despite an uptick in sales during festive months such as November and December, the overall effect remains profound. Data from the Office of Textile and Apparel (OTEXA) of the US reveals a 24.91 percent year-on-year plunge in Bangladeshi garment shipments, amounting to $6.79 billion for the January-November period.
This downturn is not unique to Bangladesh. Major garment-exporting countries, including China, Vietnam, India, and Pakistan, also registered notable declines. China’s garment shipments dropped by 25.85 percent, with Vietnam experiencing a 22.68 percent dip.
These figures are symptomatic of a wider global consumer mood, affected by the COVID-19 pandemic’s aftermath and the ongoing Russia-Ukraine conflict, leading to heightened inflation and restrained spending.
Shasha Denims’ managing director, Shams Mahmud, points to Bangladesh’s political unrest, especially before the national polls, as a key factor disrupting the plans of international retailers and brands. This unrest, combined with local garment workers’ demands for higher wages, disrupted production, further dampening exports.
Yet, Mahmud strikes a note of optimism. With political stability returning, US retailers and brands have begun showing renewed interest in local suppliers, hinting at a possible rebound in garment shipments.
Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), acknowledges last year’s subdued demand for clothing in the US. He projects a rise in demand from February or March, expecting a significant clearance of old inventories during the festive sales.
Jack Kleinhenz, chief economist of the National Retail Federation (NRF), reports a notable rise in consumer spending on both goods and services in October and November, reflecting a 5.2 percent year-over-year expansion. This spending trend, coupled with a 7 percent boost in disposable personal income, signals a rebounding consumer market.
The NRF, while awaiting December’s figures, projects spending to align with their estimates of a robust holiday shopping season growth, ranging between 3 and 4 percent over 2022.
The trials facing Bangladesh’s RMG sector reflect a complex interplay of global economic currents, domestic political scenarios, and shifts in consumer behavior. As stability returns and consumer confidence rebuilds, the industry looks forward with tempered optimism, hoping for a resurgence in RMG exports – a critical component for both the national and global apparel markets.
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