Textile and clothing manufacturers of least-developed countries (LDCs), including Bangladesh, are likely to face a significant fall in export earnings in 2020.
The World Trade Organisation (WTO), in a report, made the projection mainly due to the clothing makers’ large dependence on limited products and few markets.
The ongoing pandemic may affect the near-term prospects for some countries to graduate from their LDC status.
Bangladesh, which is on the path to graduation within years, has been experiencing unavoidable declines in economic growth and export earnings, the report cited.
The WTO released the latest report styled ‘The Covid-19 Pandemic and Trade-related Developments in LDCs’ on June 08.
The value of LDC exports of goods and services declined by 1.6 per cent in 2019, a greater decline than that of world exports (1.2 per cent).
Consequently, the share of LDCs in world exports also registered a marginal drop to 0.91 per cent in 2019.
The expected downturn in trade in 2020 may be even more severe for LDCs than at global level, reads the report.
Declining demand as well as supply disruptions have weighed significantly on LDC exports, especially exports of textiles and clothing products.
“A lack of resources to support an economic rebound is compounded by LDCs’ dependence on a limited range of products exported to a few markets, some of which have been worst affected by COVID-19.”
“The pandemic threatens to derail hard-won development gains in LDCs,” highlighted the WTO report.
Top destinations for LDCs include those devastated by coronavirus like China, France, Germany, India, Italy, Spain, the United Kingdom and the United States.
For instance, Bangladesh’s top five markets France, Germany, Spain, the UK and the US have been severely affected by the super bug.
Citing the state-owned Export Promotion Bureau, the report said the country’s exports registered an 83-per cent decline in April 2020 than that in April 2019.
Reportedly, Bangladesh and Cambodia have received order cancellations worth several billion US dollars.
According to the Bangladesh Garment Manufacturers and Exporter Association, some 1,150 member factories had $3.18-billion work orders either cancelled or withheld.
Moreover, the report said some retailers in export destinations have started to file for bankruptcy, causing significant worries to suppliers in LDCs as existing contracts risk being cancelled.
Citing an example of Ethiopia that lost 80-per cent EU demand for its cut flowers, it said agriculture and horticulture exports from the LDCs are also being significantly affected.
The report said the graduating LDCs may also exhibit poor scores in socio-economic indicators which are used as criteria for LDC graduation as governments grapple with competing resources.
The looming protracted recession may constrain the graduation prospects of some LDCs in the near term.
The WTO report also highlighted the stimulus packages announced in the LDCs and international responses amid the coronavirus pandemic.
:The Financial Express