Bangladesh's export earnings saw around 15% growth, rising to $3.98 billion in the first month of the new fiscal year.
Of the export earnings, RMG shipments earned over $3.36 billion, registering a 16.61% growth year-on-year, according to data released by the Export Promotion Bureau (EPB) on Tuesday.
Export receipts surpassed the $3.92 billion target set for the month. Export has been 14.72% higher than the $3.47 billion of July last year.
Of the receipts, more than $1,854 million came from knitwear shipments, while woven items fetched around $1,512 million, according to the EPB.
According to the Bangladesh Bank data, the country's trade deficit hit a historic high of $33.25 billion in the fiscal 2021-22 due to a surge in imports and commodity price hikes in the global market.
The trade deficit in FY21 stood at $23.78 billion.
Between July and June last fiscal year, imports increased to $82.50 billion, up 35.95% year-on-year when exports grew 33.45% to $49.25 billion.
The current account deficit also surpassed $18.50 billion during the time, according to the central bank data.
Speaking with The Business Standard, Snowtex Group Managing Director SM Khaled said, "July saw low numbers because of the Eid holidays. Orders are expected to remain stable and will not reduce much during the rest of the year.
"Some buyers have delayed their orders. But we are looking for alternatives. We hope to achieve double-digit growth in the coming days."
Envoy Textile's Chairman Kutubuddin Ahmed said the shipments were based on old orders, adding that global demand has been dropping and buyers are also offering lower prices, in some cases lower than even their break-even cost.
He also mentioned that the apparel industry is waiting to face a deep lull in the coming months as most buyers are asking for deferred shipments.
Some are also cancelling orders, he said, adding that the industry was now looking at survival.
Kutubuddin Ahmed, TAD Group MD Md Ashikur Rahman said, "We are getting lower inquiries from our major markets, the European Union and the USA. The actual order situation will be more visible after the next eight weeks."
He said most factories had booked orders till September.
Shams Mahmud, MD of Shasha Denims Ltd, said, "If we take into account that there has been on average a 30% rise in the cost of manufacturing over the last fiscal year because of the rise in raw material prices, freight and energy costs, then these figures are actually a reflection of the warnings that the business community has been talking about.
"If we look closely at the data, except for the RMG industry most of the other sectors performed below target. Raw materials in the form of raw jute etc shows a rising trend, which also shows that we are missing out on value addition.
"This also shows with the graduation of Bangladesh from Least Developing Country status more urgent results need to be shown in exports from other sectors as with FTAs and PTAs being pursued, we need to forecast future balance of payments."
He said at the moment it was imperative that Bangladesh Bank allow certain policy measures to ensure that all sectors, especially the RMG and textiles, can absorb the shock of the looming recession across export markets and the strengthening of the US dollar.
The forex exchange rates need to be on equal footing in terms of settlement and also opening letters of credit. Otherwise, all sectors will suffer, including CSME (cottage, small and micro enterprises) which plays a huge role in the domestic market in terms of financial inclusion and job creation, he said.
"If we cannot come out of these problems, with value addition coming down, this will have a knock-on effect on revenue collection by NBR and also have an adverse impact on the banking sector."
Leather on the rise
For the first time since the pandemic, Bangladesh crossed the $1 billion mark again in the export of leather, leather products and footwear, exporting $1.25bn in the 2021-22 financial year showing a sectoral growth of over 32% from the previous year.
According to the EPB data, leather and leather goods registered a growth of 9.82% to $99.41 million, which was $90.52 million in the same period of the last fiscal.
On the other hand, from Jan to June 2022 the export of leather, leather products and footwear has earned $667.39 million, a growth of 35% from the same period in the previous year.
Talking to TBS, Ibnul Wara, MD of Austan Limited, said "As the world goes into recession, it will not be surprising to see the growth figures slow down or even take a downturn in the coming months".
The sectoral growth in July 2022 compared to 21 is less than 10% where leather products have already started to show negative growth.
This year's Christmas sales in Europe and USA will play a crucial role in deciding whether we can achieve the export target of $1.44bn set for the year 22-23, he added.
Nevertheless, Bangladesh holds a lot of potential for growth in the leather sector.
The global leather industry is worth nearly $400bn, of which Bangladesh's share is less than 1%.
"If we can make use of the recent global shift in sourcing and are able to attract foreign direct investment [FDI] in this sector, we can easily achieve $10bn export from this sector. It should be fairly easy to attract FDI in leather, leather goods and footwear due to the abundance of raw materials in Bangladesh. However environmental compliance in the supply chain will be most important in attracting FDI," said Ibnul Wara.
"The formula to boost this sector would be a fully functional CETP [common effluent treatment plant] that helps to pass international compliance certifications in raw material processing, and to retain the local raw material for value addition before export," he added.
The EPB data showed that jute and jute products, which logged negative growth in all months of the last fiscal, also finally lit a light of hope, registering a growth of 5.17% to $63.91 million, which was $60.77 million in the same period of the last fiscal year.
Mridha Moniruzzaman Monir, vice-chairman at the Bangladesh Jute Spinners Association and MD of Golden Jute Industries Ltd, said the jute sector exporters are also struggling due to price hike of raw materials.
This growth is value driven, which might shrink its market share, he added.
Among apparel products, home textiles, the new player in the export basket which claimed second position in the last fiscal year, registered a growth of 3.89% to $95.95 million, which was $92.36 million in the same period of the last fiscal.
According to the EPB data, during the same period agricultural products registered a negative growth of 34.89% to $63.91 million, from $98.15 million in the last fiscal year.
Engineering products, another promising export sector of the country, marked a growth of 31.88% to $43.56 million from $33.03 million last year.
As per official data, the fish, pharmaceuticals and plastic sectors also performed well in July.
In the last fiscal year 2021-22, Bangladesh bagged $52.08 billion in total exports, registering a 34.38% year-on-year growth.