Bangladesh Could Benefit from Global Trade Tensions: Analysis

Amid escalating global trade tensions, Bangladesh is well-positioned to capitalize on new opportunities in the apparel sector, according to industry leader Faruque Hassan. The Director of the International Apparel Federation (IAF) highlighted that while the country has made significant strides in exports, a more targeted focus on investments in the apparel supply chain's backward linkages is critical for sustainable growth.

In a comprehensive analysis shared with the media on Tuesday, Hassan examined European Union (EU) apparel imports for the year 2024, shedding light on Bangladesh's competitive standing in the global market.

The analysis reveals that the global apparel market showed modest growth, with total EU imports rising by 1.53% from US$91.17 billion in 2023 to US$92.57 billion in 2024. Bangladesh, in particular, achieved a commendable export growth of 4.86%, with its apparel exports increasing from US$18.86 billion to US$19.77 billion during the same period.

Notably, Bangladesh's performance was outpaced by some other competitors in the global market. While China, the EU’s largest apparel supplier, grew by 2.61%, countries like Cambodia and Pakistan recorded robust growth rates of 20.73% and 12.41%, respectively. Vietnam and India also saw growths of 4.21% and 1.97%, while Turkey faced a notable decline of 6.64%.

Bangladesh's volume of exports to the EU saw an impressive 10.18% increase, which outperformed the global average of 8.98%. However, its growth in export volume was accompanied by a concerning 4.84% decrease in unit prices, which poses a challenge for maintaining long-term profitability in the face of declining global prices. Overall, EU's global apparel imports dropped in unit prices by 6.83%, largely influenced by China’s 8.43% price cuts.

In particular, the EU-Vietnam Free Trade Agreement (FTA), effective since 2021, has significantly benefited Vietnam by gradually eliminating tariffs, further intensifying competition. Other countries, such as Cambodia, have also seen sharp price reductions.

Despite these challenges, Bangladesh's share in the EU apparel market has grown slightly, reaching 21.37% in 2024 compared to 20.69% in 2023. In contrast, China, the largest supplier, held a larger share of 28.12%, up from 27.87% in 2023. Vietnam and India made up 4.66% and 4.89%, respectively.

Hassan emphasized that Bangladesh must adopt a more strategic approach to enhance its competitiveness in this evolving market. "While growth in export volume is encouraging, the decline in unit prices signals the need for greater value addition, improved operational efficiency, and diversification of markets," he stated.

In conclusion, Bangladesh has a unique opportunity to expand its share in the global apparel market amid shifting trade dynamics. However, achieving sustainable growth will require addressing challenges in pricing and strengthening its overall supply chain infrastructure.