Second wave of Covid panic weakens import orders

Bangladesh’s import orders fell by nearly 14% in October, as apparel exporters reduced their purchases of textiles during the second wave of coronavirus in the United States and Europe.

The latest data from the Central Bank shows that the opening limit for letters of credit in October fell to 3.83 billion US dollars from 4.43 billion US dollars a month ago.

Similarly, in terms of value, the settlement of letters of credit (often referred to as actual imports) fell from $3.71 billion in October to $3.34 billion in October, a drop of more than 10%.

In a conversation with FusionExcel, a senior official of Bangladesh Bank (BB) said that the country’s overall imports have fallen again as the second wave of coronavirus infections swept the United States and European countries, which reduced the demand for ready-made clothing ( RMG) Products of Bangladesh.

In addition, the central bank governor attributed the recession to the unexpected slowdown of the global economy from the pandemic.

BB data shows that in October, the opening volume of import letters of credit for back-to-back imports of textiles fell from USD 547 million in September 2020 to USD 431.34 million, a decline of more than 21%.

After analyzing the data of the past eight months, it was found that the downward trend in imports began in April this year after the outbreak of the coronavirus in Bangladesh.

After restarting the overall business activities nationwide, imports increased in June, but from July 2020, the downward trend of purchasing from foreign countries began again. The downward trend in imports continued until August.

RMG entrepreneurs pay close attention to the overall situation because they are worried about the outbreak of a new round of Covid-19 pandemic in Western countries, Bangladesh's main export destination.

Fazlul Hoque, former chairman of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said: “Due to the second wave of the Covid-19 pandemic, new orders for RMG products have fallen slightly since October.”

Mr. Hoque, who is also the managing director of Plummy Fashions, is worried that back-to-back imports of RMG products may further decline in November.

Square Denims general manager Sayeed Ahmad Chowdhury echoed Mr. Hoque's words and said that during this period, new orders from global buyers fell by about 7.0%, mainly due to the second wave of coronavirus infections around the world.

Chowdhury pointed out: “Due to the ongoing Covid-19 pandemic, the supply chain disruption in the apparel and apparel industry continues.”

On the other hand, the import orders for raw cotton in October increased by nearly 20% from US$194.2 million a month ago to US$237.1 million, while the opening amount of letters of credit for capital machinery increased from US$409.8 million to US$442.8 million.