The global apparel industry is experiencing a significant demand rebound especially in the West that is US and EU, driven by factors like fading recession fears, improved consumer sentiment, and inventory restocking after the holiday season. This increase in buying presents new opportunities for garment-manufacturing countries, but the picture is not uniform.

China sees demand spike, Bangladesh a drop

As per a QIMA report Q1 2024 saw a 20 per cent YoY increase in demand for textile and apparel. US-based buyer demand for inspections in China grew by 12 per cent YoY, while European demand saw even faster growth, particularly from Germany (+35 per cent), France (+30 per cent), and the Netherlands (+33 per cent). China's apparel exports to the US rose in value terms by 0.48 per cent and in volume terms by 14.94 per cent in January-February 2024 compared to 2023. While China remains the dominant supplier, Vietnam is also showing promise

Bangladesh on the other hand despite the global rise in demand, exports to the US and EU witnessed a decline in the first two months of 2024 compared to 2023. As per OTEXA & Eurostat data RMG exports to the US and EU declined in 2024 compared to 2023. However, there are signs of increased inquiries from new markets like Australia, Japan, India, and Korea.

The data clearly indicates, China is likely to be the biggest beneficiary of the US buying surge, with strong growth in inspections and audits. Bangladesh may struggle to compete due to recent cost escalations. In the EU, both China and Bangladesh are facing export decline, though China's decline is smaller. Vietnam's exports to the EU have also decreased.

However, increased inspections in Bangladesh indicate potential order growth, with diversification beyond traditional US and EU markets (e.g., Australia, Japan).

Challenges and opportunities

There are several challenges for export growth among supplier countries. Rising production costs is foremost. Countries like Bangladesh need to address this issue to remain competitive. They also need to diversifying beyond traditional markets US & EU market that can provide Bangladesh and other countries with new opportunities. Moreover, export incentive policies can significantly impact a country's competitiveness.

The growing demand for apparels presents an opportunity, but Bangladesh faces challenges. Cost competitiveness and government policies (cash incentive reduction) are crucial factors for further growth. Diversifying markets and addressing cost concerns will be key for Bangladesh to capitalize on this potential bonanza.