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Export Import Condition of Bangladesh
Export Import Condition of Bangladesh
Bangladeshi international trade is extremely small relative to the size of its population,
although it experienced accelerated growth during the last decade. It is not very
diversified and depends on the fluctuations of the international market. The Bangladeshi
government struggles to attract export-oriented industries, removing red tape and
introducing various financial and tax initiatives. Between 1990 and 1995 Bangladesh
doubled its exports from US$1.671 billion in 1990 to US$3.173 billion in 1995 and then
almost doubled them again from US$3.173 billion in 1995 to US$5.523 billion in
1999.During the 1990s, the United States has been the largest trading partner for
Bangladesh, with its exports to the United States reaching 35.7 percent in 1998-99. This
percentage consisted mainly of Ready-Made Garments (RMG). Germany is the second-
largest export market, with the proportion of goods reaching 10.4 percent; and the United
Kingdom is in third place at 8.3 percent. Other export destinations are France, Italy, the
Netherlands, Belgium, and Japan.
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2008 17.49 25.16
2009 17.05 23.07
2010 21.65 29.47
2011 26.70 37.87
2012 27.60 37.74
2013 31.63 41.56
2014 33.06 45.17
2015 34.97 45.57
2016 37.66 48.16
2017 39.17 56.76
2018 44.17 65.52
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higher in 1998 and 1999 compared to immediate earlier years. The ratio dropped to
0.59% in 2003 from 1.46% in 1980 though it was 0.75% in 2001 (IMF various years).
The contribution of the export sector to Bangladesh’s GDP has been gradually increasing
over the years. While export share in GDP was 4.52% in 1980, this share has reached to
13.45% in 1999, reflecting 197.56% increase in GDP contribution in nineteen years
(World Bank 2004). This ratio further increased in 2000, 2001 and 2002. The ratio was
15.38% in 2001. The trade openness (trade/GDP ratio) was around 14% to 16% till 1989.
After that the ratio increased to 28% in 1995. In 2001 the ratio has increased to 36.88%
which implies that trade has been liberalized in Bangladesh to a great extent since 1980.
Over the years trade deficits ranged from 2.23% to 7.37% of GDP (World Bank 2004).
The export earnings also continuously increased over the years with increased import
payments. Though import payments are always higher than the export earnings in
absolute terms, the percentage of Bangladesh’s export to imports is improving gradually
and in recent years has been quite impressive. In FY 1983-84 the value of Bangladesh’s
exports was US$ 811 million and the corresponding figure for Bangladesh’s imports was
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US$ 2073 million that represents export/import ratio of 39.12%. The export-import ratio
increased to 70.09% and 67.80%, respectively, in FY2001-02 and FY 2002-03 (EPB
2004).
During the last decade, Bangladeshi exports shifted from the sale of agricultural products
and raw and processed natural resources to labor-intensive manufactured goods
(including clothing, footwear, and textiles), but the country, unlike neighboring India,
could not catch up with the exporters of skill-intensive products. The problem of balance
of trade in Bangladesh is well known: ever since the independence of the country, export
earnings have persistently fallen behind import payments. Consequently, every year the
country incurs a huge trade deficit.
Bangladesh has a long history of maintaining a negative trade balance, importing more
goods than it exports. In the 1970s and 1980s it imported goods and services twice and
sometimes 3 times as much as it exported. Even during the relatively successful 1999
financial year, the country exported just US$5.523 billion worth of products while it
imported US$8.381 billion worth of products, leaving a large trade shortfall of US$2.858
billion.
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Year Value (Tk. Million) Price Indices (1984/85 = 100)
Exportsa Importsa Trade Balancea Exportsb Importsb
1973/74 2,983 7,320 -4,337 46.8 49.0
1974/75 3,136 10,842 -7,706 57.9 64.2
1975/76 5,552 14,703 -9,151 50.7 58.2
1976/77 6,670 13,993 -7,323 56.1 57.7
1977/78 7,178 18,216 -11,038 64.4 59.1
1978/79 9,632 22,073 -12,441 80.4 68.7
1979/80 10,997 30,525 -19,528 97.0 87.4
1980/81 11,484 37,288 -25,804 80.0 102.6
1981/82 12,387 38,729 -26,342 68.7 107.1
1982/83 18,016 45,265 -27,249 69.9 101.5
1983/84 20,136 50,874 -30,738 82.5 100.1
1984/85 26,225 68,263 -42,038 100.0 100.0
1985/86 27,396 62,929 -35,533 72.5 88.9
1986/87 33,682 68,496 -34,814 75.2 81.1
1987/88 41,161 91,588 -50,427 88.0 82.5
While developing countries were the major destinations during the 1970s and early
1980s, this direction reversed from the middle of 1980s and the trend continued
throughout the 1990s and thereafter. Now industrial countries are the main destinations of
Bangladesh’s exports. The industrial countries used to represent 41.4% share of
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Bangladesh exports in 1978 and developing countries used to represent 45.8%. In 2002
these figures stood at 88.3% and 11.7% respectively for industrial and developing
countries. Among the developing countries, the Asian countries import more than others
from Bangladesh.
It is also observed that the annual growth rate of Bangladesh’s exports to the world is
positive since the 1990s; it is found very impressive in 1990 and 1994 being 28.1% and
16.3% respectively. However, the corresponding figures are better for industrial
countries: 40.6% and 18.7%. The export growth rate to developing countries in 1998 and
2002 are negative, -15.9% and –2.9% respectively though these rates were positive in
1990 and 1994.
Trade Policy Reforms:
During the past three decades, Bangladesh carried out extensive trade policy reforms. In
particular, the country has been pursuing a liberal trade policy since the beginning of the
1990s, which is consistent with the trends in the global market economy, Uruguay Round
Accord and agreement with the World Trade Organization. The government formulated a
five-year export policy along with a more liberal five-year import policy in 1997/98 with
the objective of attaining a favorable trade balance and gradual improvement in the
foreign exchange reserve situation (GOB 2002). The governments in 1990s really wanted
to promote rapid export growth by reducing and eliminating the anti-export bias prevalent
in the economy. Keeping this goal in mind, the government has been pursuing a limited
protective policy only in consideration of several important issues like public health,
security and religious restrictions. Also, the government has been adopting more liberal
import and export policies and programs including reduction and harmonization in tariff
rates, and elimination of many quantitative restrictions on imports (GOB 2002, CSB
2003).
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Vegitable Jute Products ICT Products Potteries
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Growth of Exports:
Bangladesh’s total exports got a significant boost with an annual trend growth rate of
14.24 percent during 1985/86 to 1999/00, compared to an annual trend growth rate of
below 10 percent (in nominal US dollar terms) over the earlier period of 1972/73 through
1984/85. Such a pattern of export growth over time largely reflects the effects of progress
in Bangladesh’s policy reforms over the period. Export products during the earlier period
(e.g. jute and jute goods) did have a significant effect in limiting the overall export
growth, especially starting with the mid-1980s. The export upturn in the latter period also
reflects the fact that the export setback in jute and jute goods was more than recouped by
remarkable growth in the export of a new product group, ready-made garments.
Jute goods:
Among jute and jute goods, only jute goods had a statistically significant low annual
trend growth rate of more than 6 percent during the early period and around 1 percent for
the entire period. In the latter period, (1985/86 to 1999/00), it had no significant growth
trend. Raw jute exports, on the other hand, had statistically significant negative growth
trends for the whole period as well as for the second period. The reasons for the decline
were the growth of jute manufacturing industry in the country and falling demand for raw
jute in developed countries due to extensive use of synthetic fibers (Hessian, 1996).
Frozen food:
Frozen food (mainly frozen shrimps) was one of the major product groups, which had a
highly satisfactory trend growth rate of 16.11 percent for the whole period. However, its
growth remained uneven, a spectacularly high rate of 31 percent during the period till
1984/85 along with a sharp drop to about 8.4 percent during 1985/86 to 1999/00. The
drop in the growth rate in the later period may be attributed to a fall in demand in the EU
markets in the late 1980s and early 1990s, which recovered only during the second half of
the 1990s. The dwindling growth of frozen foods in the later period may also be
attributed to supply constraints.
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Tea:
Tea falls in the category of an exceptional export product since it had a significant growth
of 13 percent during the early period up to 1984/85. However, its growth was so low and
erratic subsequently that it showed a negative growth trend during the later period. While
Bangladesh successfully recouped the loss of tea export earnings caused by the
dislocation during the country’s war of Independence, it lost the momentum in its race
with India and Sri Lanka in the late 1980s and early 1990s.
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Annual Growth Trends of Exports by Commodity Groups
Commodity Group 1972/73 – 1999/00 1972/73 – 1984/85 1985/86 – 1999/00
Raw Jute -1.75 0.71 -2.13
Jute Manufactures 1.22 6.49 1.01
Frozen Foods 16.11 30.58 8.4
Tea 1.75 13.23 -0.95
Leather 8.86 13.2 4.88
Readymade Garments* 57.10 94.91 20.37
Others 19.02 23.18 24.39
Total Exports 10.91 8.6 14.24
Source: Author’s estimation based on Bangladesh Bank data.
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Growth in Exports Millions
7000
6000
5000
M i l li o n $
4000
3000
2000
1000
0
1990-91 1991-92 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00
years
12%
Woven Garments
6%
Kintwear
6%
Frozen Food
54%
22%
others
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in 1990/00 with the share of export in GDP rising from 7 per cent to 12 percent during
the same period.
Trend of growth in export among 1980-90 to 1990-00
Description 1980/81 1990/91 1999/00 Annual compound Annual
Growth rate % compound
1980s Growth rate %
1990s
Export(millions $) 710 1718 5752 9.2 14.4
Import(millions $) 2282 3510 8566 4.4 10.4
Trade Deficit 1572 1792 2814 1.3 5.1
(million $)
Export as % of 31.1 48.9 67.1
import
Export as % GDP 5 7.3 12.1
import As of GDP 16 15 17.9
Openness of the 21 22.3 30
economy %
Source: Export Promotion Bureau and World Bank
Changes in Composition of Exports and Imports:
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Exports of traditional goods (composed of jute, jute goods, tea and leather), constituted
most of Bangladesh’s total exports, around 97 percent in 1972/73. These exports
precipitously fell to less than 10 percent in 1999/00. At present the dominance of raw jute
and jute goods in the export trade of Bangladesh has weakened considerably, and some
non-traditional items have made inroads. For example, the share of raw jute in export
earnings has declined from about 38 percent in 1972/73 to a meager 1 percent in 1999/00.
Over the same period, the share of jute goods declined from 52 percent to less than 5
percent. Another traditional exports item, tea, declined from 2.7 percent to 0.3 percent
during the period. Tea’s relative export share did increase in some of the years in the
1980s but it declined sharply in later years. Leather’s share in total exports showed a
significant increase from 4.6 percent in 1972/73 to more than 10 percent in the late 1980s
but declined to a level of 3.4 percent in 1999/00.
On the other hand, nontraditional exports (i.e., exports of goods other than traditional
ones) dramatically grew in importance from 3 percent of total exports in 1972/73 to more
than 90 percent in 1999/00. Among the nontraditional exports, RMG including knitwear
rose to 54 percent during 1999/00 from an insignificant level in the early 1980s. The
share of frozen food increased from less than 1 percent to 6 percent during the years.
Frozen food’s share in total exports was higher in the 1980s but its later decline reflected
a deceleration in its growth performance in recent years. Residual export category
showed a big jump in export importance from 1.8 percent in 1972/73 to 31 percent in
1999/00.
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Composition of Exports by Commodity Groups
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Figure 4.2.1 shows that:
The growth in exports has fluctuated considerably from an average low of 7% in 1981-
1985 period to an average high of in excess of 17% in 1991-1995 and 2006-2008 periods.
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The share of primary commodities to total exports decreased from 17.5% in 1980-81 to
7% in 2007-08.On the other hand, the share of manufactured goods to total exports
increased from 44% in 1980- 81 to 93% in 2007-08.
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Trend of Export Earnings:
At present, Bangladesh faces growing economic competition from India, Pakistan, and
Indonesia, countries which could offer better infrastructure and larger and growing
domestic markets. The exports of Bangladesh have been experiencing a steady rise since
the late 80s of which apparels constitute approximately 75% of the total exports. Other
items include frozen foods, jute & jute products, leather & leather products, handicrafts,
vegetables, chemical products etc. Major export markets for Bangladeshi exporters are
North America (33%) and EU (52%) while other regions constitute the rest. In Fiscal
Year 2006-07, total exports earnings of Bangladesh exceeded US$ 12 billion. The trend
of Bangladeshi exports from FY 1972-72 to 2006-07 iis shown below.
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Conclusion:
Bangladesh economy has passed through a heightened pace of global integration in the
1990s. The degree of openness of the Bangladesh economy is now higher than many
developing countries – exports and imports of goods and services currently account for
about a-third of the country’s GDP. Thus, by definition, the state of the global economy
is likely to have a stronger impact on the Bangladesh economy now than at any time in
the past. The impact of the state of the global economy would continue to be increasingly
felt in terms of the country’s macroeconomic performance, GDP growth rate, external
sector performance, foreign exchange reserves, and health of the financial institutions.
This is perhaps one of the most important legacies that the Bangladesh economy has
inherited through its developmental practice and reforms of the 1990s.
Bangladesh’s export sector registered double-digit real growth rate throughout the 1990s.
As a matter of fact, real export sector growth rate was almost three times the real GDP
growth rate during this period. Even during FY 1990 and FY 1991, a period which
coincided with the last major global recession, Bangladesh’s export sector posted robust
growth rates of 17.9% and 12.7% respectively. The structure of export was different,
though, at the time. Raw jute, jute goods and leather were some of the major export
commodities in the early 1990s, their combined share being equal to the share of RMG in
total exports of Bangladesh. A relatively diversified base and market provided some sort
of a cushion against sudden fluctuations of the global market.
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Bangladesh maintains export trends
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Knoema Corporation (US)
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