50 Star US Inc.
The US is Bangladesh's top export market, however over the past few months, shipments to the US market have decreased due to high inflation and retail outlets' stockpiling of outdated, unsold clothing products.
Consumers in the west are spending less on consumer goods due to rising inflation brought on by the devastating effects of COVID-19 and the Russia-Ukraine war.
Consumers spend less on luxuries like apparel and electronic devices when prices are rising. The US apparel firms and merchants cut back on their global imports of garments, including significant suppliers like China, Vietnam, and Bangladesh.
According to data from the Export Promotion Bureau (EPB), RMG shipments to the USA decreased by 5.51 percent year over year to $8.51 billion during the most recent fiscal year. Bangladesh exported apparel to the US for $9.01 billion in fiscal 2021–2022.
According to the EPB data, the US markets accounted for 18.82 percent of all Bangladeshi garment exports during the previous fiscal year.
According to the data, total export revenues from the market in the most recent fiscal year were $9.7 billion, a 6.82 percent decrease from the $10.41 billion they were in the fiscal year before.
The local exporters, however, are optimistic that the shipment from Bangladesh to the USA would increase starting in December as it is anticipated that the inflationary pressure will relax to a great extent.
National Retail Federation (NRF) Chief Economist Jack Kleinhenz said in a statement on July 6, 2023, "The U.S. economy did better in the first half of 2023 than early indicators suggested and appears to be 'rolling forward' even as the rate of growth slows for the remainder of the year."
"The first half of the year is over, and the economy is still moving in the right direction," said Kleinhenz. Although its rhythm, tone, and pattern have slowed, it hasn't stopped moving forward, and recently updated data shows underlying strength that appears to be advancing.
The ability of American consumers to withstand economic headwinds will be put to the test in the upcoming months, according to Kleinhenz.
Nevertheless, consumers are "the path of least resistance to economic growth" and "are doing their part to keep the economy moving forward," thanks to $500 billion in excess savings that accrued during the pandemic and ongoing employment growth.
According to revised figures from the federal Bureau of Economic Analysis, first-quarter gross domestic product adjusted for inflation increased by 2% year over year as opposed to the 1.1 percent initially reported, according to Kleinhenz's comments in the July issue of NRF's Monthly Economic Review.
Private final sales to domestic customers, which exclude inventories and imports to provide a solid measure of underlying development, were revised to 3.2 percent increase from 2.9 percent, while the personal savings rate was raised up to 4.3 percent from 3.4 percent.
Despite significant headwinds from interest rates and inflation, consumer expenditure, which accounts for 70 percent of GDP, climbed at an annual pace of 4.2 percent in the first quarter. This was four times the growth rate of 1 percent in the fourth quarter of 2022 and the strongest growth since mid-2021.
Interest rates were kept steady by the Federal Reserve's Open Market Committee last month for the first time in ten months, with the explanation that the break would allow time to evaluate the impact of the hikes already approved.
However, the majority of committee members stated that they anticipated two additional rate increases in the upcoming months, with some forecasting anything between one and four increases. Only two of the eleven members anticipate flat rates.
Although inflation is still high, it is slowing down and relieving pressure on people. According to the NRF, based in Washington, which contributes $3.9 trillion to the annual GDP and supports one in four U.S. jobs, or 52 million working Americans, prices were up 3.8 percent year over year in May, according to the Personal Consumption Expenditures Price Index, the Fed's preferred measure of inflation.
Actually, as a result of increased inflationary pressure, stockpiling of unsold products, and slower job creation, the nation's overall imports decreased.
Prior to the previous fiscal year, local exporters fared well in American markets as demand increased as the economy recovered from the pandemic. In 2021–2022, receipts increased by more than 50% year over year.
Additionally, Bangladesh outperformed other exporting countries like China, Vietnam, and India. Despite a 15.62 percent levy, Bangladesh's primary export to the US is clothing, which generates more than 90% of its income.
In the first four months of 2023, US imports of textiles and clothing decreased by 22.05 percent to $33.78 billion. In 2022, it was $43.333 billion at the same time.
The interest rate in the USA is still high, according to Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association.
As a result, he claimed, people are spending less on apparel. According to him, the US has reduced its global garment imports by over 23% from the previous fiscal year.
According to him, local garment exporters saw a sharp increase in clothing sales to the USA in the fiscal year 2021–2022, as American consumers increased their spending following the Covid–19 recovery.
Experts in trade claim that Bangladesh has benefited from the protracted trade spat between the US and China and that it will likely continue in the near future.
The local exporters will be more competitive and win more business in the USA if the gas and power supplies are greatly enhanced.
Hassan anticipates that exports to the USA may decrease both in volume and value this fiscal year.
Former BGMEA president Anwar ul Alam Chowdhury Parvez claims Bangladesh has fared better than other nations that provide the USA with clothing.
However, given the instability of the global economy, it is not a serious issue for the local providers. According to him, it is only temporary in the US markets.
The local suppliers suffered significantly as a result of the local currency's decline in value relative to the US dollar. The depletion of foreign currency reserves has caused the taka to lose value against the US dollar by around 25% over the past year, according to experts.
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