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Bangladesh garment export to EU increases despite Brexit negotiation and elections

Bangladesh’s exports of apparel items to the European Union though remained slow-moving but still could secure a growth in fiscal 2016-17 mainly despite uncertainties around Brexit negotiation, national elections in major European countries, depreciation of the euro against the dollar. On the other hand exporters suffered for prolonged labour unrest and poor port  transportation services at home.

According to Bangladesh Export Promotion Bureau (EPB) data, exports to the EU grew only 3.49 percent year-on-year to $17.75 billion in fiscal 2016-17, while the growth was 11.66 percent in the last year.

 Figure: Garment export to EU (USD in billion) Source: EPB
Figure: Garment export to EU (USD in billion)                                                                     Source: EPB

The Brexit in June last year was mainly responsible for the slowdown in garment export to the EU, where nearly 60 percent of Bangladesh garment items are shipped in a year.

The UK is the third largest garment export destination for Bangladesh. Last fiscal year, garment export to the UK declined 5.97 percent to $3.31 billion. It was $3.52 billion in the year before, registering a 21.37 percent year-on-year growth rate.

Garment export to some major EU members increased slightly between 3 and 5 percent year-on-year. Germany, the second largest export destination for Bangladesh, export amounted to $5.14 billion in fiscal 2016-17. Export earnings from France, Spain and Italy were nearly $2 billion each in the last fiscal year, according to EPB data.

This year was of elections for the major economies of the EU. France, the Netherlands and the UK have already had theirs while Germany is going to hold it on September 24, 2017.

In August 2016, one euro was exchanged for $1.135. It came down to $1.045 in December. The trend continued until June this year before reversing. In the first week of July, one euro was exchanged for $1.140.

On the prospects of Bangladeshi apparel in the EU, Kurt Salmon Global Sourcing Reference, a European research firm, stated in a study that Bangladesh was gaining the market share with regard to sourcing by both Europe and North America.

It is still mainly focused on less complex products but it has the potential to further strengthen its relative position if production capabilities can evolve and quality can be improved, while ensuring social and environmental compliance standards, the study said.

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