2022 has been an unprecedented year in more ways than one for the West.
On one hand, the Russia-Ukraine war resulted in rising inflation even if Europe, in particular, had to bear the double whammy of unparalleled heat wave, which scorched the landmass across the continent.
Now if you are wondering what these have to do with Bangladesh’s sweater exports, think again!
Bangladesh’s standing and repute
Sweater holds a prominent position in Bangladesh’s apparel export dynamics and Europe is its single second-biggest apparel export destination after the USA.
Bangladesh turned into a major sourcing hub for sweaters for international retailers and brands after work orders started shifting from China — Chinese manufacturers are no longer interested in making sweaters because of the complexities in the manufacturing process, higher cost of production and shortage of skilled workers, according to industry insiders — which is evident from the export figures as well.
As per data from the country’s Export Promotion Bureau (EPB) in the last fiscal year of 2021-22, Bangladesh shipped sweaters worth US $ 5.64 billion, registering 39.25 per cent year-on-year growth, compared to what was US $ 4.05 billion in 2020-21.
“Sweater has seen a double-digit increase in product penetration out of the total RMG exports of Bangladesh. This is mainly contributed through the business migration happening from China largely and from countries like Cambodia and Vietnam. It’s a great opportunity for the Bangladesh RMG sector to capitalise and make sweaters an integral part of the RMG export targets,” opined Abdullah Al Mamun, Business Unit Manager of Marks & Spencer, interacting with the media.
Europe spanner in sweater export growth
Europe has been plagued for months by extreme heat, drought and wildfires, with many cities experiencing unprecedented temperatures and conditions. A new report from Copernicus, Europe’s climate observation service, found temperatures recorded from June through August were 0.4℃ warmer than in 2021.
August was particularly brutal, with average temperatures 0.8℃ hotter than in 2018, the service said, also the hottest on record, even if Italy, Spain, Portugal, France, Germany, the Netherlands, Belgium, Luxembourg and the United Kingdom were all under increasingly hazardous conditions.
What’s more, owing to climate change, some parts of the continent, home to more than 60 per cent of garments exported from Bangladesh, witnessed up to 30℃ temperature even in September, which is unusual since summer comes to an end after June in Europe.
Given the situation, it was but expected that the sweater makers in Bangladesh will be impacted and which they did after witnessing a relatively dull season.
“This is unusual for my factory,” underlined Managing Director of Softex Sweater, Md. Rezwan Selim, who claimed receiving fewer orders from international buyers since November.
Inflation added a new dimension to Bangladesh’s sweater export performance.
The annual inflation rate in the 27-country European Union was 9.8 per cent in August, up from 8.9 per cent in July thereby squeezing the buying capacity of the common people, figures released by the EU’s statistics agency showed, while inflation in the 19 member states using the euro hit 8.9 per cent.
It is the highest inflation rate reported since 1997, when EUROSTAT started recording statistics.
The result – clothing retailers and brands in Europe started delaying the placing of fresh work orders in Bangladesh or cut down on order volumes as sales took a massive hit.
“International retailers and brands are making delays in taking the delivery of products for which orders were placed between December and March, citing piling up of unsold stocks,” meanwhile claimed the Managing Director of Rupa Group, Shahidul Islam.
For instance, a major European sweater sourcing company, which buys nearly US $ 2 billion worth of items from Bangladesh a year, has, reportedly, put on hold securing finished goods.
Russia fails to live up to the expectation too
Russia is a major sweater export destination for Bangladesh and the war, which began in February this year, has affected the shipments severely.
Apart from Russia, shipments to Ukraine and Poland seem to have taken a hit due to the prevailing geopolitical crisis.
“And if the war continues for a longer period, the future of sweater export for winter 2023 could indeed be unpredictable,” meanwhile observed Mostafa Quamrus Sobhan, Chairman of Dragon Sweater & Spinning.
Poland’s biggest clothing retailer LPP, a major buyer of Bangladeshi sweaters, closed its Russian stores in March after Russia’s invasion of Ukraine, according to Euronews (sales in Russia accounted for 19.2 per cent of the group’s revenue for 2021-22) even if closure of such outlets has affected the sweater export from Bangladesh, claimed industry insiders.
“Many European retailers and brands have closed their stores in Russia. This has also affected the sourcing of sweaters from Bangladesh,” quipped Islam of Rupa Group, which shipped more than US $ 16 million worth of sweaters last year.
Glimmer of hope at the end of the tunnel?
As winter approaches and temperatures start to fall across Europe amidst reported energy crisis, many in Bangladesh are hoping import of sweaters to increase in the days to come.
“The dragging shortage of gas across Europe may lead to rationing of utility services, meaning lesser usage of heaters at offices and homes. This may force consumers to buy warmer clothes during the winter period,” underlined a sweater maker speaking to Apparel Resources (AR) even if many others in the industry opined the actual impact will be clearer after the winter sales period is over as they felt unpredictable climate changes can even also lead to extreme winters and hence more sale of winter clothes.
Till then, let’s keep our fingers crossed!