Uncertainty over Brexit and slower economic growth in Euro zone have put an adverse impact on Bangladesh’s denim exports to European countries, which saw an 11 percent negative growth to $977.65 mn in the first eight months of 2019. The factors have also caused negative growth in global denim goods exports to the EU markets.
According to Eurostat, statistics directorate of the European Commission, Bangladesh, the largest exporter of denim goods, exported denim products worth $977.65 mn, down by 11.04 percent, during January-August period of 2019, which was $1.10 bn in same period a year ago. In the first eight months of 2019, global denim exports to EU declined 11.84 percent to $3.40 bn, which was $3.86 bn in the same period last year. Bangladesh’s closest competitor Turkey has posted a 10.82 percent negative growth to $734.5 mn in the same period. China saw a 23.68 percent fall from $366 mn to $279 mn, while Pakistan registered a 5.29 percent fall to $569 mn. For the negative growth, economist and industry people have blamed the slowdown in EU economy and uncertainty over Brexit. They also find appreciation of taka against US dollar to be another reason for Bangladesh’s eroding competitiveness.
As per the latest data of the European Commission, Euro zone economic growth dropped to 0.1 percent in the third quarter from 0.2 percent in the previous one.” Economy of the European countries is on the verge of recession, which cut the consumption,” Policy Research Institute Executive Director Ahsan H Mansur has told. The bloc of 28 countries also saw a rise in unemployment as a result of which imports from the global market experienced decline, he points out. Moreover, he says, exchange rate is another reason because of which Bangladeshi manufacturers are losing competitive edge in the global market. ”Across the European Union zone, the retailing situation of denim goods is not good. Consumption in Euro zone has fallen. This is because of uncertainty over the execution of Brexit,” Sharif Zahir, a Director of Bangladesh Garment Manufacturers and Exporters Association, has told. Every retailer has witnessed fall in sales, while there is stocks from the previous sourcing, says Zahir, adding that the retailers automatically cut new purchase leading to drop in export earnings. Meanwhile, some have said that Bangladesh has capacity beyond demand, which may have caused the downtrend.”
In Bangladesh denim industry, the installed production capacity is higher than the work orders and there have been addition to the capacity. So, more focus on a single product is too much,” Syed M Tanvir, Director of Pacific Jeans Limited, says. “In remaining competitive and sustaining the sector, we need to have a better study about the demand and supply as concentration on single product creates uneven competitions,” Tanvir mentions. In addition, denim makers have to move for diversification and producing different types of goods, specially value added one, he suggests.
As an EU member, the United Kingdom is very important for Bangladesh as it is the third largest export destination. In the last fiscal year, Bangladesh’s export to the UK stood $4.16 bn, which is 10.29 percent of total exports. But the growth to UK is slower due to the Brexit issues. In the fiscal year 2018-19, Bangladesh’s export earnings posted a 4.51 percent growth, which was 11.76 percent in the previous year.
