Export back to normal, can it be sustained

After a plummeting export situation in February through April 2020, Bangladesh’s monthly export earnings (goods) went up (in July 2020) to the amount which can be considered as equal to the pre-coronavirus normal. In July 2020, 3.9 billion dollars were earned from exporting goods, the highest single month earning in the observed timeline (January 2018 to July 2020). Which is a positive sign because a bounce back of this kind seemed unlikely in the first quarter of 2020. Within January to April 2020, Bangladesh’s economy took a dive and experts predicted prolonged recession even depression if the coronavirus situation was not handled carefully.

However, after a continuous fall, export earning bounced back and increased three months in a row, showing a sign of so called ‘V’ shaped recovery in export (goods) arena. As an export-oriented economy, recovery in export earning largely contribute to the recovery of the total economy of Bangladesh. While it’s too early to make such conclusions, from the data and bouncing back of the export earnings, a quick recovery of the economy can be expected.

What happened in Bangladesh’s commodity export within January-July 2020?

Bangladesh’s export earning from goods export in January 2020 was 3.6 billion dollars. In February 2020 it fell down to 3.3 billion dollars, in March 2020 it fell further down to 2.7 billion dollars and in April 2020 it fell down to an unprecedented 0.5 billion dollars. It was a position from where it could completely jeopardize the export economy or bounce back to normal. So, the questions was, which way it was going to go and what kind of recovery can be expected and when will the export market bounce back to normal? While experts debated on various types of recovery, export started to increase aggressively within May to July 2020. In May 2020 the export earnings from goods increased from 0.5 billion dollars to 1.5 billion dollars, in June it went further up to 2.7 billion and in July 2020 it skyrocketed to 3.9 billion; a sharper rise compared to the fall of the earlier this year.

While the aggressive bounce back is good news, a hefty amount of export dollars were lost amid this fall and rise. In the first seven-months of 2020, the total export earning was 18.3 billion dollars which is 5.6 billion dollars less than the first seven month’s earning in 2019 and 4.1 billion dollars less than the first seven months earning in 2018.

How was export in top six destinations and what to expect next?

Bangladesh exports to USA, Germany, UK, Spain, France and Italy accounts for over 58% of Bangladesh’s export in goods. Since all of the counties were hit hard by Covid19 pandemic the export to these countries plummeted.

If we look at the Chart-2, we can see the export condition dipped during January to April, but bounced back to the normal in July. A quick bounce back recovery (V-shaped) was observed in all of the cases. The reasons behind this fast recovery are not conclusive yet. But given that all of these countries have passed the peak infection of Covid19 and the number of infections are declining under strict containment measures, the export to these countries can be expected to be stable until something unfavorable happens again.

The situation may go bad again

The situations that can wash away fast recoveries are many. But main reasons are related to the future of Covid19 situation in the world specially in Bangladesh and Bangladesh’s major export destinations. Public health experts have been warning of a second wave during coming winter. If it happens, cross border trade is likely to go south again rapidly. Countries all over the world should be prepared for such dire situations because in such cases, recovery may not be as rapid as they were this time.

To be prepared for a situation like that, countries should draft policies and promote cross border digital trade platforms and build necessary infrastructures on a priority basis.

Data source: EPB