Friday, 19th April, 2024
Friday, 19th April, 2024

Covid second wave fear dampens import orders

Bangladesh’s import orders dropped by nearly 14 per cent in October as apparel exporters scaled back purchase of textiles products, amid the second wave of coronavirus in America and Europe.

Opening of letters of credit (LCs), generally known as import orders, fell to $3.83 billion in October from $4.43 billion a month ago, according to the central bank’s latest data.

Similarly, the settlement of LCs, generally known as actual import, in terms of value, fell by more than 10 per cent to $3.34 billion in October from $3.71 billion in the previous month.

Talking to the FE, a senior official of the Bangladesh Bank (BB) said the country’s overall imports went down again as the second wave of coronavirus infection, which hit the United States and European countries, pushed down the demand for ready-made garment (RMG) products of Bangladesh.

Besides, the central banker attributed the falloff to the unexpected slower global economic recovery from the pandemic.

The opening of LCs for back-to-back import of textiles products plummeted by more than 21 per cent to $431.43 million in the month of October from $546.70 million in September 2020, the BB data showed.

After analysing the data for the last eight months, it was found that the falling trend in imports started in April this year after the outbreak of coronavirus in Bangladesh.

Imports increased in June just after reopening of the overall business activities across the country, but the declining trend in purchase from abroad started again from July 2020. Such a falling trend in import was continuing until August.

RMG entrepreneurs observe the overall situation closely as they are worried about the fresh spate of Covid-19 pandemic outbreak in the Western nations, Bangladesh’s key export destinations.

“The placing of fresh orders for RMG products has decreased slightly since October because of the second wave of Covid-19 pandemic,” Fazlul Hoque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told the FE.

Mr Hoque, also managing director of Plummy Fashions, feared that the back-to-back import of RMG products may fall further in the month of November.

Echoing Mr Hoque, Sayeed Ahmad Chowdhury, general manager of Square Denims, said around 7.0 per cent fresh orders from global buyers fell during the period, mainly due to the second wave of coronavirus infections in different parts of the world.

“Supply chain disruptions are still going on in the apparel and clothing sector because of the ongoing Covid-19 pandemic,” Mr Chowdhury noted.

On the other hand, import orders for raw cotton increased by nearly 20 per cent to $232.71 million in October from $194.20 million a month ago while the opening of LCs for capital machinery rose to $440.28 million from $408.98 million.

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