Bangladesh's textile industry is currently facing major challenges due to the global recession and inflation as retailers in both European and US markets are either deferring the shipments of finished products or delaying orders due to soaring inflation.
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The world's second-largest garment exporter after China is facing prolonged challenges including power shortage domestically affecting production on one hand while its major markets are postponing shipments due to surging inflation, Bangladesh Live News reported.
Plummy Fashion Ltd, a supplier of Phillips-Van Heusen Corporation, the parent company of fashion brand Tommy Hilfiger and Inditex SA's Zara, observe a drop of 20 per cent in new orders in July from a year earlier.
Bangladesh's textile industry is facing unfavourable trade policies, internal security concerns, the higher cost of imported inputs apart from post-Covid-19 supply chain disruptions and a decline in global demand.
The energy crisis in Bangladesh has increased the cost of the business in the country.
One of the leading exporters that supply to Gap Inc. and H&M Hennes & Mauritz AB claims that it depends on generators for at least 3 hours a day to power its dyeing and washing units in the manufacturing hub of Gazipur on the outskirts of Dhaka, reported Bangladesh Live News.
The cost of electricity from generators is three times more than power from the regional grid.
At the onset of the Covid-19 outbreak, Bangladesh garment orders worth USD2.87 billion were cancelled as of March 31, 2020, according to a Bangladesh Garment Manufacturers Association (BGMA) estimate.
This affected about 2.09 million workers and over 1,048 factories. In the first week of April 2020, RMG exports declined by almost 84 per cent.
Since then the RMG exports could not pick up to the desired level of growth due to constricted demand and radical shifts in consumer tastes apart from Covid-19-related obstacles, according to Bangladesh Live News.
According to Policy Insights, a flagship publication of the Policy Research Institute in Bangladesh, the country's RMG has considerably grown in recent decades increasing from USD 120,000 in FY 1985 to about USD 34 billion in 2019.
However, all the growth came in with massive over-concentration in a few products and few markets.
According to the Bangladesh Bureau of Statistics (BBS) estimate, Bangladesh's growth, which had declined to 3.5 per cent in 2020 due to covid-19 led disruptions recovered to 6.9 per cent in 2021.