Originally posted in The Business Standard on 1 January 2023
In the first five-six months of the current fiscal year, the export earnings growth has gone through ups and downs. I expect the fiscal to end with double digit export growth till June.
Although there is some uncertainty in the European market, there is a kind of growth in the US market. The ongoing crisis in Europe due to the difficulties in the energy sector may last for the next few months. As a result, there may be a negative trend in demand for export products.
The growth in the US market is expected to continue. In the meantime, some export orders from China are being shifted due to the tension in the commercial relations between China and the United States and Europe. Bangladesh, like other countries, seems to be able to take advantage of that.
Good growth in export earnings is expected till June due to these benefits. However, the shortage of gas has become a major challenge in the export sector at the moment. Non-availability of raw gas for production and washing and dyeing in the textile sector will disrupt exports.
The gas crisis was a little less in winter, but this crisis may increase in summer and in the last half of next year. Especially if there is no internal gas expansion or extraction.
Production is already disrupted due to the gas crisis in various sectors including ceramics, glass, steel, leather. Liquid fuel has to be bought at high cost due to the power crisis. Entrepreneurs continue to export despite the increased cost. As such, despite some crisis, the performance of the export sector will be quite good in the first six months of next year.
The gas shortage may become more severe in the next six months, especially for the textile sector. This crisis will also increase in garment companies that have composite factories. Gas scarcity can also be a crisis for ceramics or other industries.
The value of the dollar or the crisis of reserves may worsen the pressure in the coming days. In this case, government initiatives to increase remittance inflow to the country through legitimate channels will be very important. How much assurance the government can give on issues like LC opening and timely import of raw materials will be an important issue for export earnings in the last six months of next year.
However, the first installment of the International Monetary Fund (IMF) loan is expected to be released during this period. Considering this, the situation may be somewhat normal.
If we divide the entire period of the coming year into two parts, there will be positive growth in exports despite the uncertainty in the first half. However, in the second half, gas supply, foreign exchange reserves, ability to open LCs and due to this the confidence of the buyer institutions may be cause for some apprehension.
The export sector is doing relatively well despite the woes of the domestic market. In this situation, it is important to ensure that the process of production, import of materials and export of goods is not hindered in any way.
Availability of sufficient dollars to open LC required for import of raw materials should be ensured. At the same time, the government should send a message to the main importing countries of our products through the Ministry of Foreign Affairs that the government has all kinds of initiatives to ensure exports.
The associations of the entrepreneurs of the export sector should take initiatives to maintain the confidence of brands and buyers.
– Dr Khondaker Golam Moazzem, research director, Centre for Policy Dialogue (CPD).