As one of the world’s largest producers of ready-made garments, Bangladesh is feeling the dry heat of major cotton-producing countries such as China, Europe, North America, Brazil and Africa. According to a report by Bloomberg, U.S. cotton production may drop by 28% this year, while Brazil may drop by 27%, while India’s cotton production is expected to be relatively low.
Monsoor Ahmed, the new director and CEO of the Bangladesh Textile Mills Association (BTMA), warned that if cotton production in these countries does fall, it will have consequences for Bangladesh’s readymade garment industry Serious impact. The association imports 10% to 11% of cotton from the United States, 4% to 5% from Brazil, and also imports yarn and fabrics from China. Therefore, the decline in cotton production in these countries will have a negative impact on Bangladesh’s ready-made garment production. Himel Khan, director of Misela Textiles, also predicted that Bangladesh’s textile sector may be severely affected by declining cotton production in the United States, Brazil and other countries.
Walmart’s cancellation of orders led to greater losses for Bangladeshi garments
At the same time, Shahidullah Azim, Acting Chairman of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Said that the cancellation of orders by Wal-Mart, Bangladesh’s largest clothing importer, may also cause huge losses to Bangladesh’s ready-made garment industry. Walmart has canceled 30% of its orders and delayed shipments of some orders, he added. Mohideen Rubel, director of BGMEA, expects this to prove to be a huge blow to the industry as production costs have already increased due to various reasons. As the situation worsens, there is nothing left for exporters to do but keep a close eye on developments.
Inflation will cause orders to drop by 30%
Eurostat said that in July 2022, the inflation rate in the euro area was about 8.9%. Unemployment is likely to be higher in the EU at 9.8% and in the UK at 10.1%. In the last financial year, total export revenue from the EU and UK accounted for more than 60%. Statistics show that in July 2022, the inflation rate in the United States soared to 8.5%, causing purchase orders to fall by 30% to 35%. Azim added that the drop in orders had led to the closure of many large factories in Bangladesh. In August, Bangladesh’s export revenue fell by about $500 million due to reduced orders, delayed deliveries and forced discounts.
The increase in fuel prices will affect production costs
Shovon Islam, managing director of Spira Group, explained that due to the increase in fuel prices and 20% of the logistics cost of manufacturing, Bangladesh China’s production costs increased by about 15%. Rubel pointed out that a 62% increase in yarn prices, a 500% increase in freight costs and a 60% increase in chemical costs have also affected Bangladesh’s garment production sector. Rubel pointed out that other factors that have hindered economic growth in the past few months include: drought in cotton-producing countries, cancellation of orders, global inflation, power shortages, etc.
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