Good news from exports

Posted in economics by jrahman on May 5, 2011

According to the ADB, Bangladesh’s economy is expected to be buoyed by an exports boom in the coming year.  What’s driving the exports boom?

The ADB’s story is that exports are supported by:

  • inventory replenishment in the key markets as they recover;
  • rising wages in competitive countries;
  • product and market diversification;
  • relaxed rules of origin to EU.

Over the fold are some charts and numbers supporting a good news story on exports.

The chart below shows the growth in exports from selected regional countries in the 12-month to February 2011 — exports from Bangladesh are growing more strongly than from elsewhere in the region.

How much of it is because of rising cost pressures in the other countries?  I don’t have any data off hand to answer this.  Would be interesting to find out.

What type of exports are booming?  In the year to February, total exports grew by 48%.  Ready made garments grew by 50% in that time, as did seafood.  Jute products, meanwhile, grew by a whopping 79%. 

And it seems that we may be seeing signs of product diversification.  In 2009, 69% of Bangladesh’s exports were ready made garments.  In 2010, garments’ share declined to 66%.  It’s not that garments exports fell — recall the Wal-Mart effect.  Rather, other products grew even faster. 

Sure, these are early days.  Garments still dominate the exports scene.  But it’s good news that other products are coming to the market.

It’s also good to note that diversification is happening in the destination market.  In 2008-09, exports to China amounted to 5.8 billion taka.  In 2009-10, it rose to 10.5 billion.  In the same period, exports to major southeast Asian economies went from 7.7 billion taka to 13.2 billion taka.  Exports to the Gulf went from 7.9 billion taka to 10.5 billion taka.  To the East Asian tigers, up from 16.8 billion to 23.1 billion.

Okay, these are tiny numbers compared with the 2009-10 total exports of over a trillion taka.  But there is an unmistakable trend here.  Five years ago, US and major European countries made up nearly three-fifths of the exports market.  Now it is less than half.

That’s also a good news. 

Data: CEIC Asia.  Smoothed with 3-month moving average.

Major southeast Asia: Indonesia, Thailand, Vietnam, Philippines, Malaysia.

Gulf: Saudi Arabia, UAE, Qatar, Kuwait, Oman, Bahrain.

East Asian tigers: Korea, Taiwan, Hong Kong, Singapore.

Major Europe: Germany, UK, France, Italy.

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  1. Diganta said, on May 7, 2011 at 8:42 pm

    Bangladesh has got advantage of falling currency exchange rates which is again driven by widening trade deficit. There’s nothing wrong to run on deficit if it’s under control, but it will hurt the inflation scores. I think it’s already in double digits 😦 …

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