Exports Set to Double: Bangladesh Garment Exports on Track to Become World's No. 1

In the Russia-Ukraine conflict continues, the international financial environment tightened, the United States and Europe, the main developed economies of the end demand weakened, stubborn inflation and other risk factors led to a significant slowdown in global economic growth, trade improvement is more tepid against the backdrop of the performance of the textile and clothing exports of large countries have undergone a number of changes.

Bangladesh apparel import and export data

Bangladesh's cotton consumption is expected to increase by 800,000 bales to 8 million bales in 2023/24 due to strong garment exports, according to a USDA report.

Almost all of Bangladesh's cotton yarn is digested in the domestic market for the production of fabrics and garments. Bangladesh is now close to replacing China as the world's largest exporter of cotton garments, and future export demand is expected to be further strong, driving up the country's cotton consumption.

Garment exports are vital to Bangladesh's economic growth, ensuring currency exchange rate stability, especially through exports to realize the dollar foreign exchange earnings.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said that garments accounted for more than 80 percent of Bangladesh's exports in fiscal year 2023 (July 2022-June 2023), reaching about $47 billion.

This is more than double that of a decade ago, surpassing the previous year's all-time high, indicating the increasing acceptance of Bangladesh's cotton products by global importing countries.

Bangladesh's knitwear exports are critical to the country's apparel exports, which have almost tripled in value over the last decade.

Bangladesh's apparel exports to the United States and the European Union are growing, and the country's cotton apparel exports are particularly prominent in 2022, as the annual report of the Fashion Industry Association of America shows that American fashion companies have tried to reduce their purchases from China and shift their orders to markets including Bangladesh.

The reasons for this are the Xinjiang cotton ban, US tariffs on Chinese apparel imports, and proximity sourcing to avoid logistical and political risks.

In this context, Bangladesh, India and Vietnam become the three most important sources of apparel sourcing other than China for U.S. retailers in the next two years. At the same time, Bangladesh has the most competitive sourcing costs of any country.

The Bangladesh Export Promotion Bureau (BEPB) is targeting apparel exports of over $50 billion in FY2024, slightly higher than the previous fiscal year's level. Yarn mill openings in Bangladesh are expected to rise in 2023/24 as inventories in the textile supply chain are absorbed.

According to the Fashion Industry Benchmarking Study 2023 conducted by the United States Fashion Industry Association (USFIA), Bangladesh remains the most price-competitive global apparel manufacturer, while Vietnam's price-competitiveness has declined this year.

Vietnam's textile industry declines

According to the Vietnam Statistics Office (VSO), Vietnam's garment exports in January-May this year amounted to $12.3 billion, down 17.8% year-on-year, mainly due to a decrease in global demand.

In 2022, textile and garment exports became Vietnam's second-largest source of export earnings after cell phones and electronic products.In 2022, Vietnam's textile and garment exports were valued at $44 billion, playing a crucial role in Vietnam's economic growth.

However, Vietnamese industry sources also said that falling orders and end-product prices have had a huge impact on manufacturers' profits. At the same time, the devaluation of Vietnam's currency has also increased the cost of raw material imports, making it difficult for apparel exporters to fulfill orders, especially high-priced contracts signed in the early stages.

In addition to the above factors, Vietnam's low-cost advantage is also weakening, with the average monthly wage of garment factory workers already at around $300 compared to the global average of $200.

Vietnamese enterprises of all types and sizes recognize that the textile and apparel industry continues to decline in the status of export orders. Data shows that it is not uncommon for companies to see sales plummet by 40-50%. Large enterprises have also seen their revenues fall by 20-30%.

Why is Bangladesh's textile industry growing?

Even during the global economic slowdown, Bangladesh's performance has remained strong. While other countries have been weak in exporting to the US market, Bangladesh's locally manufactured garment exports have been strong.

For example, from January to April this year, Bangladesh's apparel exports to the U.S. fell by 17 percent, but at the same time, China's apparel exports to the U.S. fell by nearly 35 percent.

Bangladesh is performing strongly in the US market as China is losing market share due to the tariff war. Moreover, Bangladeshi garment manufacturers have been supplying goods to US customers during the New Crown pandemic.

As a result, U.S. retailers and brands have confidence in local suppliers, which has enhanced the image of the textile and apparel industry and the country, strengthening workplace safety and factory greening.

Not only to the US, but even during the global economic slowdown, Bangladesh's performance has been relatively strong in the European Union, the United Kingdom, and emerging markets, especially in Asia such as Japan, Australia, India, and South Korea.

The surge in exports of locally manufactured garments to these destinations suggests that the demand for these goods from these consumers is also increasing significantly, which is also linked to price competitiveness.

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