Bangladesh economy shows early signs of pandemic recovery

19 Sep 2020 10:18 AM
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A rebound in garment orders after demand crashed during spring shutdowns is assisting to revive the Bangladesh economy.

Apparel makers, the country’s main export industry, say they are looking ahead to Christmas orders from the US and other major markets.
Remittances from Bangladeshi employees employed overseas also have recovered, helping to relieve pressures from a pandemic quasi-shutdown during the spring.

The Asian Development Bank reported this week that the monetary comeback was encouraging. It really is forecasting the economy will grow at a robust 6.8 percent annual pace in the fiscal year that leads to June if current conditions persist.

That’s a much brighter outlook than in April-May, when global clothing brands suspended or canceled orders worth more than $3 billion, affecting about 4 million employees and a large number of factories.

“At the moment we are able to say that the ready-made garment industry has had the opportunity to regain its growth trajectory upward compared to March-May,” said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association, or BGMEA.

“As economies in the West were turning around we were successfully able to get the buyers back to the negotiating table, which explains why 80 percent to 90 percent of the $3.18 billion in canceled orders have already been reinstated,” she said.

Bangladesh earns about $35 billion annually from garment exports, mainly to the united states and Europe. The industry may be the world’s second largest after China’s. Bangladesh’s exports rose 0.6 percent to $3.9 billion in July, after plummeting 83 percent to $520 million in April. Imports, which are reported on a quarterly basis, commenced recovering earlier, rising 36 percent in May-June.

In August, exports rose 4.3 percent from a year earlier, to $2.96 billion, mostly driven by apparel shipments, according to the government’s Export Promotion Bureau. Garment shipments totaled $5.7 billion in July and August.

“The garment sector is making an excellent comeback. Our agriculture is doing well. Remittances are coming. These all are good signs for the economy,” said Ahsan H. Mansur, executive director of the Policy Research Institute, a think tank in Dhaka.

“The pace of the recovery is plainly visible. But challenges have been there too. The pace of the recovery will depend on how the pandemic behaves in the West over another few months,” Mansur said. That’s the inestimable question facing everyone.

By Thursday, Bangladesh had reported more than 342,000 confirmed coronavirus infections and 4,823 deaths. The united states confirmed its first positive case on March 8.

Some experts say that some of the number of infections is greater than the state count. The garment industry says few personnel in its factories have fallen ill because of precautions such as employing fewer people on the production lines and imposing safety guidelines. The federal government imposed a nationwide lockdown on March 26, and the garments sector was closed for practically 90 days, reopening only gradually.

The united states director for the ADB, Manmohan Parkash, said that the federal government has managed the crisis well, “with appropriate economical stimulus and social protection measures.”

“We are encouraged by the increase in exports and remittances, and hope the recovery will be sustained, which can only help in achieving the projected growth rate,” Parkash said.