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Due to the high inflationary pressure, two main importing countries, the USA and the UK, reduced their imports of clothes in April of this year. As a result, consumers reduced their purchases of apparel products.
Over the past few months, imports of clothes from both the USA and the UK have decreased, with the rate of decline progressively accelerating as consumers' spending on luxury goods like clothing was delayed by inflation.
The devastating effects of COVID-19 and the Russia-Ukraine war, two key causes of concern that also shook the global supply chain, have been felt most keenly by consumers in the western world.
While exports of garments from Bangladesh to the UK climbed marginally even throughout the crisis, exports of clothing to the USA fell out of the two main export destinations.
The UK Markets
According to a statement from the UK's Office for National Statistics (ONS), the value of goods imports decreased by £0.7 billion (1.4%) in April 2023; after eliminating the impact of inflation, imports of goods decreased by 0.4 percent.
In April 2023, trade with non-EU nations increased in both imports and exports of goods, while trade with EU nations decreased.
Despite the difference narrowing in April 2023, since late 2022 imports from EU nations have routinely outpaced those from non-EU nations.
According to the ONS data, the amount of apparel imported into the UK in April was £1.161 billion ($1.470 billion), a 20.91 percent decrease from £1.468 billion in the same month previous year.
Additionally, on a month-to-month basis, the UK's import of clothes decreased. For instance, according to the ONS data, the UK imported £1.459 billion worth of clothes in March.
However, during the first four months of 2023, Bangladesh's exports of clothing to the UK increased by 9.56 percent year over year, totaling $1.79 billion.
The USA Market
The USA imported apparel worth $25.21 billion between January and April of this year, a 22.15 percent decrease from the $32.39 billion in apparel imported during the same time previous year.
According to data from the Office of Textiles and Apparel (OTEXA), an office under the US Department of Commerce, garment export from Bangladesh to the USA, the single largest export destination of the country, decreased by 17.88% year on year to $2.7 billion in the January-April period of this year.
According to the data, Bangladesh received $3.28 billion in export revenue from clothing shipments from the USA between January and April of last year.
According to Otexa data, the USA's garment exports from China, the world's largest supplier of clothes, decreased by 32.45% to $4.52 billion in January–April of this year compared to the same time previous year.
Another significant global participant, Vietnam, saw a decrease in garment exports to the USA in the first four months of this year compared to the same period last year, falling by 27.33 percent to $4.37 billion.
The US inflation rate is falling. For instance, the USA's inflation rate was 9.1% in June of last year and dropped to 4.9 percent in April of this year.
According to Faruque Hassan, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), although inflation is trending downward, the state of garment exports to the United States may remain negative for a few more months.
As the inflation in important export markets like the European Union (EU) and the USA has been improving progressively, the shipment of clothing from Bangladesh should revive rapidly from the end of this year.
According to Hassan, the bank interest rate may be reduced somewhat starting in June this year in the USA and the EU, which might help western consumers breathe a sigh of relief.
Because they are spending more on necessities like food and housing, shoppers will therefore spend more on clothing products.
The effects of the lower borrowing rate, however, will become apparent at the end of this year, and from the following year, Hassan predicted a significant increase in demand for clothing.
At the end of this year, due to inflation brought on by the Russia-Ukraine war, the size of the worldwide market for textile products could even decrease by 30%.
For instance, if the size of the global apparel market drops to $192 billion at the end of this year from $640 billion in 2022.
The major exporters of clothing, such as Bangladesh, China, Vietnam, Cambodia, and Pakistan, will consequently lose out on business in the global supply chain.
The BGMEA has adopted three methods as backup plans to maintain modest growth in garment exports until December of this year, including expanding garment export to new markets, particularly in Asian markets like Japan, India, South Korea, and Middle Eastern nations.
For the local suppliers to receive more money from the sale of the apparel items, two more initiatives include boosting the export of high-value-added garment items and garment items made of man-made fibers (MMF).
According to Hassan, the recent relationship between Bangladesh and America might not have an impact on the commercial ties between the two countries.
Additionally, the BGMEA already has a Memorandum of Understanding with the prominent American Apparel and Footwear Association, which was signed last year and increased businessmen's confidence in both nations.
The BGMEA has lobbied the USA and written to the governors of a select few states to request duty-free treatment for the export of clothing made from cotton that is brought in from the USA.
As a result of requests from the United States and local cotton traders and millers, Bangladesh has already abolished a long-standing fumigation of USA cotton in Bangladesh. Currently, Bangladeshi clothing exports to the USA are subject to a 15.62 percent tariff.
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