Published in The Financial Express on Monday, 24 August 2015.
Govt starts gauging impact of euro-area crisis on exports
Rezaul Karim
The government has started assessing the impact of eurozone crisis on the country’s exports to devise coping strategies for the external shock, officials said.
As part of the exercise, the Ministry of Finance (MoF) has sought recommendations from the Commerce Ministry so that the adverse situation can be tackled more effectively, they said.
“The bulk of our export of the country goes to the European Union markets. Exports of frozen shrimp and fish, including other products, declined to the European market due to massive depreciation of the euro,” a senior research officer of monitoring cell of the Finance Ministry.
He said the country’s shrimp exporters claimed export of fish to the European Union (EU) market decreased about 50 per cent.
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) also sent a letter to the government bringing the issue to the government’s notice, he added.
The euro, official currency of 18 EU countries, fell against the US dollar significantly in the last couple of months, which hit the country’s export, he added.
“The government’s attempt to take stock of the situation is a good initiative. But, it is not possible to depreciate taka against the dollar or euro. I don’t know how the government can address this issue,” executive director of the Centre for Policy Dialogue (CPD) Professor Mustafizur Rahman told the FE Sunday.
“I think the government can extend various existing facilities to the affected exporters concerned. Exporters’ exposure to bank loan can be looked into while working out any stimulus package,” he said.
The country’s export earnings recorded a 3.35 per cent growth in the fiscal year (FY) 2014-15, which is the lowest in 13 years. The country set an export target of $33.2 billion for the last fiscal, but it missed the target by around 6.03 per cent. Exports amounted to $31.19 billion in the last fiscal year.
Exporters said they have been facing deteriorating market condition in Europe due to EU deflation over the last fiscal.
They said more than 60 per cent of Bangladeshi leather exports go to the EU market.
Former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Salam Murshedy told the FE the country’s export to the EU has been declining significantly in the last couple months.
“As a result, we our export growth in the eurozone in the first month of the current fiscal year was negative. Exporters saw this growth 13 years ago,” he said.
Mr Murshedy, also president of the Bangladesh Exporters Association (BEA), said many counties have already taken their preparation to address the euro fall crisis to help exporters survive the ordeal and improve their global competitiveness.
He said the government should provide incentives to help the exporters overcome the situation.