News / RMG the star performer as Bangladesh exports show strong growth

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After logging modest growth in the fiscal year that ended in June, exports out of Bangladesh have got off to an impressive start in the new financial year, driven by its mainstay RMG (ready-made garment) trade.

Exports in July, by value, climbed 15.2%, to $4.59bn, eclipsing the 6% reported for fiscal 2022/23, according to new data released by the Bangladesh Export Promotion Bureau.

Bangladesh RMG exports for the month shot up 17.4%, year on year, to $3.95bn, accounting for the lion’s share of outbound trade.

“The robust growth in export earnings during the first month is excellent news for Bangladesh,” said Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association.

Industry sources in Dhaka told The Loadstar Inditex lifted large RMG volumes by air from Bangladesh last month, mostly through direct airline connections, with some movements under available cross-border transhipment options from India. A bilateral trade deal between India and Bangladesh inked this year opened a land-air corridor for the latter’s exports out of Delhi Air Cargo.

Bangladesh has steadily consolidated its market share of global sourcing from Asia, as western importers increasingly search for alternatives to doing business with China. According to anecdotal data, Bangladesh has seen its share of the global apparel trade grow from 6.4% in 2021 to 7.9% last year.

However, the Bangladesh trade community and investors have their share of concerns and scepticism about political tensions unfolding in the run-up to elections in December for a new government/political leadership.

A Bangladesh container shipping industry official told The Loadstar.  “Some customers might rethink their investment and sourcing market.” Sources also believe political unrest building in Bangladesh has also prompted importers to maximise shipments already on order.

Another challenge for the Bangladesh apparel industry is the chronic energy crisis. Sources said: “The government is trying its best to mitigate the shortage of power/industrial gas and some measurable improvements are expected over the next few months.”

Meanwhile, other nations in South Asia, including India, have also ramped up efforts to gain out of the trade migration from China, setting the stage for heightened intra-regional competition.

Setting its sights on new markets, New Delhi sees Japan as a strong bet to grow RMG exports, given tariff advantages under a government-to-government free trade deal. China previously commanded as much as 58% of Japan’s apparel imports, according to data.

Naren Goenka, chair of the Apparel Export Promotion Council (India), said: “The duty-free access for Indian RMG post-Indo-Japan Comprehensive Economic Partnership Agreement (CEPA), as against an approximate 9% for China and Turkey, is a big advantage for us.”

On a broader note, growing apparel shipments could prove a sweetener for Indian air cargo stakeholders, as the industry faces general demand challenges across major economies.