Bangladesh readymade garment and textile sectors have not yet fully recovered from the onslaughts of pandemic, says a report by The Business Standard. The situation has worsened due to rising global freight costs and weakening of the local currency against the US dollar and a looming recession and customers’ changing habits.
The report states, the Ukraine crisis has led to many issues in the country including a looming recession likely to affects its markets in the US and Europe. Inflation caused by soaring energy and food prices along with a sharp rise in housing costs and mortgages have begun to affect consumer spending patterns as they are left with dwindling disposable income.
With dollar strengthening against the Taka it has also taken a toll on brand’s profits in their home countries. For example, H&M in Sweden and Inditex in Spain have faced such fate. Also, major brands are stuck with excess inventory which will slowdown future orders. The report warns RMG and textiles sectors to be careful in coming days as they are likely to get fewer orders at lower prices. A proposed hike in source tax would also have a long-term impact on the industry, the report says.
Buyers might also delay payments due to the impending slowdown. This will add to the strain on the EDF facilities. Additionally, the hike in energy prices alongwith a rise in cost of doing business will make business more challenging for manufacturers, the report adds.