Bangladesh economy is yet to find a solid ground. The Covid-19 pandemic followed by the Ukraine-Russia war has pushed Bangladesh to a period of great uncertainty. Its economy’s two major drivers, garment industry and remittance of expatriate workers, can hardly provide a sustainable support always. The garment industry has again entered a bad patch of time as work orders from the western buyers have fallen signaling a deepening of the current economic crisis facing the country. In addition, the garment sector is facilitated by heavy subsidies and easy loans from banks.
According to a report of a national daily Tuesday, in the September to November season, work orders have shrunk more than 20 percent as a direct consequence of inflation facing the west due to the Russia-Ukraine war. After the crunch suffered due to the Covid-19 pandemic, the industry was recovering healthily, but as the economy of US and European countries has gone jittery with high inflation, stores of major retailers and brands there are left with a large volume of unsold inventory. That is why they are not placing new orders. Moreover, they are also demanding deferral payments or urging suppliers to put shipments on hold.
But Bangladesh’s garments industry saw a higher growth after the pandemic. In fact, the growth was ‘abnormal’ in a sense. From September last year the sector posted higher exports until April from when work orders have been witnessing the present steep fall. The garment shipment of Bangladesh fell to $3.16 billion in May from $3.93 billion in April because of the Ukraine-Russia war.
The most worrying part of this development is that there is no sign that the war will come to an end soon. Even some time ago, the NATO secretary general hinted that the war might take several years to come to a definitive conclusion. Under these circumstances, the garment sector can hardly hope to see a spike in work orders. The situation is indeed bad for the sector that will undoubtedly affect the overall economy of the country also.
That is why we have time and again urged the government to create an alternative base of economy instead of depending only on the garment sector and remittance of the expatriate workers. Unless the country can create an industrial base like that of China or South Korea along with utilizing the full potentials of its agriculture, Bangladesh will have to depend on positive external factors to keep its economy going. This means that economic uncertainty will remain with us.
