Published in Dhaka Tribune on Tuesday 28 April 2020
Research: EU, US, Japan to see huge decline in clothes import, consumption this year
Imports will decline by $128 billion this year and consumption by $328 billion next year by the countries, it adds
Imports and consumption of apparel goods by the EU nations, US and Japan will decline drastically as a direct consequence of the coronavirus pandemic, predicts a research firm in India.
Imports will decline by $128 billion this year and consumption by $328 billion next year by the countries, it adds.
A research titled– Impact of Covid-19 on Key Apparel Markets– was conducted by Wazir Advisors, an India- based consulting and advisory firm made the projections.
According to Export Promotion Bureau (EPB) data, during July-February period of this fiscal year, EU countries imported 61.63% or $13.46 billion of Bangladesh’s total RMG exports, while US imported 18.16% or $3.96 billion worth of clothes during the period.
The consumption in EU market to fall by 59%, US 63% and Japan 20% in 2020, says the research.
The research also forecasts the economy of the EU to shrink by 5 to 6%, while US 3% to 4% and Japan 2% to 3% this year due to the economic hit of coronavirus.
“In US and EU, online stores remain the only option to buy apparel, but consumers are primarily focusing on grocery, medicines and staples purchase. Apparel purchasing will largely be delayed due to no urgency to replenish, uncertain economic scenario, reduction in occasions to go out,” reads the research paper.
“US as a society is more consumerist compared to Europe. Younger population with a habit of regular spending will cause US to maintain a higher consumption than EU during the lockdown period; and more importantly, faster return to normal consumption levels once the lockdown is over,” it says further.
European economy was already under stress for the last couple of years and countries like Italy and Spain, having been hit worst by the epidemic, will cause lower level of consumption than the US in 2020, it adds.
What does it mean for Bangladesh
Bangladesh’s apparel exports are highly dependent on EU and US markets, while Japan is a very potential market that is growing steadily.
As a result, slower import and decline in consumption in big economies will be a big concern for Bangladeshi manufacturers.
“Stores remain closed in EU, US and other developed countries due to the lock-down to stop spread of coronavirus. Consumers’ spending and imports will decline significantly,” Mostafiz Uddin, Managing director of Denim Expert Limited has told Dhaka Tribune.
It will not be a big blow for the apparel exporters if the virus does not prolong long. In that case, their consumption will gradually increase with the recovery of economy, says Mostafiz.
In facing the fall in consumption in the traditional markets, economists suggested to focus on new markets to retain the global market share of apparel goods.
“Bangladesh’s apparel exports are highly concentrated on few markets like EU and US. Since the coronavirus has impacted the global economy, it will cut consumption of apparel goods,” Khondaker Golam Moazzem, research director of Centre for Policy Dialogue (CPD) says.
In the given context, Bangladesh has to concentrate non-traditional markets such as India, China and other Asian countries, he adds.
In the US market, China’s share has reduced from 34% to 30% in last 3 years. The gap has mainly been filled by Vietnam and Bangladesh.
China’s share has reduced from 17% to 15% in last 3 years in EU markets, which are mostly taken by Bangladesh, the Netherlands and Poland.