Published in The Business Standard on Monday 15 June 2020
‘Export growth target unattainable’
Experts say returning to a positive trend is a major challenge for exporters at this moment
Exporters and analysts think the government’s 15-percent export growth target in the coming fiscal year is an ambitious one and not possible to achieve given the current international trade situation thwarted by the Covid-19 pandemic.
Businesses across the globe are going through a downturn in the wake of the pandemic, they said, pointing out that Bangladesh’s exports also witnessed an 18 percent year-on-year negative growth in the past 11 months.
Against such a backdrop, returning to a positive trend is a major challenge for exporters at this moment and hence the government’s lofty export target in the proposed budget looks far removed from the reality on the ground, they observed.
According to the updated data of the state-run Export Promotion Bureau (EPB), Bangladesh’s export earnings during the July-May period of the current fiscal year was $30.95 billion, down from $37.75 billion in the same period a year ago.
Meanwhile, in May this year, exports from Bangladesh declined by about 62 percent to $1.4 billion when compared with the corresponding period of the previous year as the Covid-19 outbreak has badly dented the global supply chain.
The country fetched $3.81 billion in May 2019, which was the highest single-month receipt in the country’s history.
The readymade garments (RMG) sector witnessed around 62 percent fall in exports to $1.23 billion in May, which was 84.20 percent of the country’s total export earnings in that month. Export earnings from the apparel sector were $3.24 billion in the corresponding period last year.
Commenting on the matter, Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue (CPD), said, “At first we have to see where negative growth in export earnings stands at the end of the ongoing fiscal year.
“This is because it is important to understand the year-end negative trend in exports to make an estimate about the growth in the following year. This works as the base level.”
If overall exports are in too much of a downturn, meaning the base level remains very low, there might be a possibility to achieve a 15 percent growth, he continued.
“Secondly, the demand for goods and commodities is not increasing to the tune that we had expected. It is being said that buyers in the developed countries will flock to shops once they are reopened after coronavirus lockdowns, but shops are being closed after their reopening as the risk of Covid-19 transmission is increasing again.”
Therefore, it might take quite a long time for the demand for export goods to these countries to get back to normalcy. From that point of view, the 15 percent growth target is highly ambitious, he observed.
However, it is still not clear when the situation will normalise and demand for low-cost products will increase in the global market.
Moreover, with Bangladesh itself grappling with a higher health risk at the moment, he continued, the country’s competitors, where the health risk has been reduced, will primarily take advantage of this situation. “This is called health premium,” he noted.
Considering the coronavirus outbreak, demands from the export destinations and health risks within the country, a 5 percent growth will be a big achievement, he said.
Meanwhile, Shahidullah Azim, former vice-president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told The Business Standard that the growth in Bangladesh’s export earnings, which were 11 percent at this point of time last year, have declined by 18 percent this year. On this count, our exports have fallen by 29 percent.
“There is no business during the current pandemic, the global market is going through a severe downturn, no shipment is taking place and there is no major budgetary allocation for exporters,” he pointed out, adding that setting an export growth target at 15 percent is not practical in such a situation.
BGMEA Senior Vice President Faisal Samad said he did not expect any growth in the current situation.
It is more important to stabilise business than making any projections at this moment, he argued.
According to EPB, Bangladesh earned $40.5 billion from exports in the fiscal year 2018-19 and has a target of $45.5 billion for current fiscal year 2019-20.