DHAKA (The Daily Star/ANN) - Volatile US economy and recent presidential election pushed down Bangladesh's apparel exports to the US.
Bangladesh's apparel exports to the US, its single largest destination, declined 1.96 per cent year-on-year to $5.49 billion, due to the volatile US economy and the recent presidential election.
Bangladesh exported $5.92 billion worth of goods to the US in 2016, down from $6 billion a year ago, according to data from the US Department of Commerce.
Garment items account for 95 per cent of the goods exported from Bangladesh to the US market.
Moreover, businessmen and traders adopted the “wait and see” strategy in 2016 for the probable changes to the major US policies relating to tariffs.
Furthermore, there is a change in the attitude of the US consumers, who now prefer spending more on electronic gadgets compared to clothes, exporters said.
Global apparel exports to the US declined 6.44 per cent year-on-year to $104.72 billion in 2016 due to a fall in the buying capacity of the US consumers, said Mohammed Nasir, vice president of Bangladesh Garment Manufacturers and Exporters Association.
More electronic gadgets are now sold in the US compared to the clothing items, he said. The US election has also impacted retail sales negatively, he said.
All 9 out of 10 top apparel exporting nations of the world experienced negative growth in shipment to the US in 2016, according to the US Department of Commerce.
Among the top 10, only Vietnam's apparel export increased 0.30 per cent year-on-year to $11.32 billion in 2016.
Businessmen believe that the apparel export from Vietnam to the US may face stricter rules as the Trump administration abandoned the mega trade agreement of Trans-Pacific Partnership (TPP).
Vietnam—one of the major competitors of Bangladesh in the US markets—was supposed to enjoy a zero-duty benefit as one of the 12 member nations of TPP.After the scrapping of the TPP, the export duty of 8.38 per cent for the Vietnam to the US will remain the same, which will ultimately benefit Bangladesh, exporters opined.
Bangladesh now faces an export duty of 15.62 per cent under the America's most favoured nations' category.
However, the retailers in the US have been predicting that the current year will go good for them as well as for the suppliers due to increased number of jobs.
Retail-industry sales are predicted to grow between 3.7 per cent and 4.2 per cent this year over 2016, the National Retail Federation (NRF) in the US forecast.
The retail business might be rankled by unpredictable consumer behaviour, Matthew Shay, CEO and president of the federation, said in a statement recently.
“With jobs and income growing and debt relatively low, the fundamentals are in place and the consumer is in the driver's seat,” Shay said. “But this year is unlike any other—while consumers have strength they haven't had in the past, they will remain hesitant to spend until they have more certainty about policy changes on taxes, trade and other issues being debated in Congress.”
Jack Kleinhenz, chief economist of NRF, also warned that federal policy shifts could shake up the forecast.
“Our forecast represents a baseline for the year, but potential fiscal policy changes could impact consumers and the economy,” Kleinhenz said. “It seems unlikely that businesses will notably increase investment until tax reform and trade policies are well-defined.”
The imposition of the proposed border tariffs between 35 percent and 45 percent as part of Trump's tax reforms would also have a bad impact on consumer spending in the US, according to the NRF.
NRF analysis indicates that the border tariffs could cost an average US family $1,700 extra in the first year alone if the border adjustment provision is enacted.
Bangladesh's garment exports to the UK, the third largest destination for the Asian country, declined 5.19 per cent year-on-year to $1.53 billion in the July-December period of the current fiscal year.