In the context of the continued conflict between Russia and Ukraine, the tightening of the international financial environment, the weakening of terminal demand in the major developed economies of the United States and Europe, and the continued inflation and other risk factors, the global economic growth has slowed down significantly, while the improvement of trade is relatively weak, and the performance of major textile and clothing exporters has also undergone some changes.

According to the USDA report, Bangladesh's cotton consumption is expected to increase by 800,000 bales to 8 million bales in 2023/24 due to strong garment exports.

Almost all of Bangladesh's cotton yarn is digested in the domestic market for the production of fabrics and garments. At present, Bangladesh is close to replacing China as the world's largest cotton clothing exporter. In the future, export demand will be further strengthened, driving the country's cotton consumption growth.

Garment exports are crucial to Bangladesh's economic growth, ensuring the stability of the currency exchange rate, especially through exports to achieve foreign exchange earnings in US dollars.

According to data from the Bangladesh Garment Manufacturers and Exporters Association, in fiscal 2023 (July 2022-June 2023), garments accounted for more than 80% of Bangladesh's exports, reaching about US $47 billion.

This is more than double that of a decade ago and surpasses the previous year's all-time high, reflecting the increasing acceptance of Bangladesh's cotton products around the world.

Bangladesh's knitwear exports are key to the country's garment exports, which have nearly tripled in the past decade.

Bangladesh's clothing exports to the United States and the European Union continue to grow. The country's cotton clothing exports are particularly prominent in 2022. The annual report of the American Fashion Industry Association shows that American fashion companies try to reduce their purchases from China and shift their orders to markets including Bangladesh.

The reasons are the Xinjiang cotton ban, US tariffs on Chinese clothing imports, and close sourcing to avoid logistical and political risks.

In this context, Bangladesh, India and Vietnam will become the three most important sources of clothing procurement for US retailers in the next two years after China. At the same time, Bangladesh also has the most competitive procurement costs among all countries.

The Export Promotion Bureau of Bangladesh is targeting garment exports of more than 50 billion billion U.S. dollars in the 2024 fiscal year, slightly higher than the level of the previous fiscal year. With the digestion of textile supply chain inventory, the probability of opening a 2023/24 Bangladesh yarn mill is expected to increase.

According to the "Fashion Industry Benchmarking 2023" conducted by the US Fashion Industry Association (USFIA), Bangladesh is still the most price-competitive country among global clothing manufacturers, while Vietnam's price competitiveness has declined this year.

Vietnam's Textile Industry Decline

According to data from the Vietnam Bureau of Statistics, Vietnam's garment exports in the first five months of this year were 12.3 billion billion U.S. dollars, down 17.8 percent year-on-year, mainly due to the decline in global demand.

In 2022, textile and clothing exports will become Vietnam's second largest foreign exchange earner, after mobile phones and electronic products. In 2022, Vietnam's textile and clothing exports will reach US $44 billion billion, playing a vital role in Vietnam's economic growth.

However, Vietnamese operators also said that the decrease in orders and the decline in the prices of end products had a greater impact on manufacturers' profits. At the same time, the devaluation of the Vietnamese currency has also increased the cost of imported raw materials, making it difficult for garment exporters to fulfill their orders, especially the high-priced contracts signed in the early stage.

In addition to these factors, Vietnam's low-cost advantage is eroding, with the average monthly wage of garment factory workers already around $300, compared to the global average of $200.

Vietnamese enterprises of all sizes have admitted that export orders for the textile and garment industry have continued to decline. According to the data, it is not uncommon for companies to see a 40-50% drop in sales. Revenue of large companies also fell by 20-30%.

Why is Bangladesh's textile industry growing?

Bangladesh's performance remained strong even during the global economic slowdown. Exports of locally-made garments from Bangladesh are strong despite weak exports from other countries to the US market.

For example, Bangladesh's clothing exports to the United States this year dropped by 17% from January to April, but at the same time, China's clothing exports to the United States fell by nearly 35%.

As China loses market share due to tariff wars, Bangladesh has a strong presence in the US market. In addition, during the novel coronavirus pneumonia pandemic, Bangladeshi garment manufacturers have been supplying goods to customers in the United States.

As a result, retailers and brands in the United States have confidence in local suppliers, which also enhances the image of the textile and apparel industry and the country, enhancing workplace safety and factory greening.

Not only for the United States, but even during the global economic slowdown, Bangladesh performed relatively strongly in the European Union, the United Kingdom and emerging markets, especially in Asian regions such as Japan, Australia, India and South Korea.

The surge in exports of locally made garments to these destinations shows that demand for these goods is also increasing significantly among these consumers, which is also related to price competitiveness.