The risk of escalation of a conflict in the Middle East following the US killing of a top Iranian military commander in Iraq has overshadowed Bangladesh’s hope for a turnaround in export earnings.
Bangladesh exported goods worth $19.3 billion in the first half of 2019-20 with a 5.84 percent drop year-on-year and missing the target by 12.77 percent.
After continuous drop for four months, exports grew by around 3 percent to $3.52 billion in December, but still missed the target by 13.54 percent.
The signs of a rebound, however, are eclipsed as traders across the globe have started weighing in how the US airstrike’s hugely unpredictable impact will be felt beyond the Middle East.
Although US President Donald Trump insisted that he ordered the killing of commander Qassem Soleimani on Friday aimed to avoid a war with Iran, continuing threats have further rattled foreign capitals and global markets.
On Wall Street, the stock market fell as oil prices jumped after the news of the general’s death: The price of Brent oil, the international benchmark, surged in the early hours of Hong Kong trading to nearly $70 a barrel – an increase of $3.
The tension has shaken the market, businesses and analysts in Bangladesh as well. Gold prices surged to six-year high on Saturday.
Anwar-Ul-Alam Chowdhury Parvez, a former president of readymade garment exporters lobby lamented the situation after the Export Promotion Bureau data on Sunday showed the sector earned $6.02 billion in the July-December period, 6.21 percent less than the same period last fiscal year.
“We were trying to turn around from a bad condition, but now the war-horns have been blown. Exports to one of our major markets, the US, are under threat now,” he told. He feared that the US would take fewer garments from Bangladesh than from other countries due to geological positions.
“They would not take any risk about the timing of shipment. Our orders would be diverted in that case,” he explained.
Ahsan H Mansur, executive director of the Policy Research Institute, also thinks that the rise in US-Iran tension has put the profits Bangladesh had been making from the US-China trade war in an uncertain state.
“Our exports to the US have increased, but we lost our position as the third or fourth in the US market. We are now on No. 7 there. And if a US-Iran war starts now, a new crisis will add up,” he said.
Rubana Huq, the incumbent president of the association of entrepreneurs of the largest exporting sector readymade garment, said they did “better” in December as it was the peak season for apparel sale.
“But the overall situation has worsened. All our orders are being diverted to Vietnam and India,” she said.
She reiterated the call for urgent government support while Mansur once again urged the authorities to devaluate taka against US dollar to get over the situation.