The Ukraine war’s shockwaves are hurting Bangladesh’s apparel industry

Manufacturers and government officials in Bangladesh have claimed that as consumers in the US, Europe, and other major markets tighten imports, clothing is piling up in warehouses, reported the Financial Times.

According to manufacturers, the war in Ukraine and sanctions against Russia, as well as their effects on inflation, interest rates, and mortgages around the world, have caused a slowdown in orders since July in Bangladesh, the second-largest clothing exporter after China.

Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association, said to the Financial Times, “Everything has gone up, so the clothing budget has squeezed. That’s why some of the brands and some of the importers have slowed down their orders. Some retailers had asked Bangladeshi suppliers to stop making garments or to delay shipments for up to three months.”

He further said that this is badly impacting the garment industries in the country as they have already bought the fabric to produce clothes and are now facing a crisis because of the downturn in global clothing demands.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has said that the country exported garments worth $42.6 bn and textiles worth $2.6 bn between June 2021 and June 2022, which accounted for about 85 per cent of total exports during this period.

According to FT, the crisis in the clothing industry has come up in the backdrop of Sheikh Hasina Wazed’s Bangladeshi government gearing up to face elections next year and contending with higher prices for imported gas, leading to power cuts that have hit some garment producers. In the meanwhile, the opposition Bangladesh Nationalist party has staged protests to highlight the weakening economy.

While the country has not faced a severe liquidity crisis yet, its foreign exchange reserves have declined this year due to pressures on prices and consumer demand, along with a strengthening dollar.