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Alibaba Delegation Meets BGMEA President to Explore Online Opportunities for Bangladesh Garment Sector

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A delegation from Alibaba, the global retail and e-commerce giant, recently visited Faruque Hassan, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), at the BGMEA Complex. The Alibaba team, including Daniel Zhou, Global Business Development Manager; Tim Song, Head of Global Strategic Partnerships; Lu Fan, Sales Planning and Operations; and Nasri Ma, Business Development Manager for Bangladesh, engaged in discussions with key representatives of BGMEA, such as Vice President Khandoker Rafiqul Islam and Director Abdullah HilRakib.

The meeting centered around exploring opportunities and potential collaborations between Alibaba and the Bangladesh garment sector in the evolving global online market. Key points of discussion included current online market trends and the prospects for Bangladesh’s garment industry in the digital marketplace.

Both parties delved into possibilities for business opportunities, with a specific focus on leveraging Alibaba’s online platform for the benefit of Bangladeshi garment exporters. Technical knowledge sharing and training initiatives were also on the agenda to enhance the capabilities of Ready-Made Garment (RMG) exporters in Bangladesh.

Faruque Hassan, President of BGMEA, highlighted the importance of adapting to dynamic market trends to maintain competitiveness and capitalize on emerging opportunities. He expressed optimism about the potential of virtual marketplaces for Bangladesh’s RMG sector and emphasized the strategic role that collaboration with Alibaba could play in establishing direct connections between Bangladeshi manufacturers and end customers (B2C).

This visit aligns with BGMEA’s ongoing efforts in the digital transformation of Bangladesh’s apparel sector. A previous study project by BGMEA, officially unveiled on January 25, 2024, identified challenges and opportunities in the RMG sector. The study aims to integrate the local textile industry into global value chains and capture the shift towards online purchasing.

The report outlines market potential, sector readiness for digitization, sustainable business models, policy gaps, and necessary strategies for successfully implementing the proposed virtual marketplace. As Bangladesh’s garment industry looks towards a digital future, collaborations with global giants like Alibaba are poised to shape the landscape of online business for the sector.

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World Bank says $3.15bn Illicitly Transferred from Bangladesh Annually

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The World Bank reported that approximately $3.15 billion is illicitly transferred out of Bangladesh each year through offshore accounts.

Citing the State of the Tax Justice Report 2020, the World Bank stated that the offshore financial wealth of Bangladeshis is estimated at 0.7% of the nation’s GDP.

“Including losses from corporate abuse and offshore tax evasion, tax revenue losses are estimated at over $700 million,” the World Bank stated in its latest Bangladesh Development Update report published on 2 April. This amount equals 2.2% of the country’s total revenue income in fiscal year (FY) 2019-20.

In the Development Update report, the World Bank noted that illicit capital flows into offshore accounts from Bangladesh have been increasing.

Referring to the latest Global Financial Integrity Report 2021, the bank mentioned: “Between 2009 and 2018, as much as $3.6 billion on average per year has been laundered from Bangladesh through trade mis-invoicing.”

The World Bank highlighted that Bangladesh’s illicit capital outflow through offshore accounts is high compared to some of the country’s peer nations in its Development Update report.

Currently, Bangladesh ranks 54th among 133 countries in the Financial Secrecy Index, which assesses the extent to which a country’s tax and financial systems facilitate individuals in concealing their finances from the rule of law, according to the World Bank.

The bank further stated that Bangladesh ranked 44th globally and 3rd in South Asia in terms of illicit outflows through trade mis-invoicing.

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IMF Downgrades Bangladesh’s Growth Forecast to 5.7% for FY 2023-24

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The International Monetary Fund (IMF) has once again lowered its growth forecast for Bangladesh’s economy to 5.7 percent for the current fiscal year of 2023-24. This revision was outlined in the IMF’s World Economic Outlook released on Tuesday, April 16.

The IMF’s revised projection highlights various global and local challenges, including persistent high inflation, unemployment, reduced remittance inflow, and a decline in industrial investment targets.

This marks the second time the IMF has reduced its economic growth forecast for Bangladesh. In October of last year, it initially projected a 6 percent growth rate, down from its previous prediction of 6.5 percent for the FY2023-24 period.

The IMF’s growth forecast follows a recent announcement by the Asian Development Bank (ADB), which stated that Bangladesh’s GDP is expected to expand by 6.1 percent in FY 2023-24, driven by export growth.

Earlier this month, the World Bank also weighed in, stating that Bangladesh’s growth will be subdued due to reduced private consumption affected by high inflation. It forecasted a GDP expansion of 5.6 percent in FY 2023-24, below the average annual growth rate of 6.6 percent recorded over the decade preceding the Covid-19 pandemic.

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China’s Q1 GDP growth solid but March data shows demand still feeble

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China’s economy grew faster-than-expected in the first quarter, data showed on Tuesday, offering some relief to officials as they try to shore up growth in the face of protracted weakness in the property sector and mounting local government debt.

However, a raft of March indicators released alongside the GDP data – including property investment, retail sales and industrial output – showed that demand at home remains frail and is retarding overall momentum.

The government has unveiled a raft of fiscal and monetary policy measures in a bid to achieve what analysts have described as an ambitious 2024 GDP growth target of around 5%, noting that last year’s growth rate of 5.2% was likely flattered by a rebound from a COVID-hit 2022.

Gross domestic product (GDP) grew 5.3% in January-March from the year earlier, data released by the National Bureau of Statistics showed, comfortably above analysts’ expectations in a Reuters poll for a 4.6% increase and slightly faster than the 5.2% expansion in the previous three months.

“The strong first-quarter growth figure goes a long way in achieving China’s ‘around 5%’ target for the year,” said Harry Murphy Cruise, economist at Moody’s Analytics.

“Industrial production also supported through the quarter, but weak March data is cause for some concern. Similarly concerning, China’s households continue to keep their wallets closed.”

On a quarter-by-quarter basis, GDP grew 1.6% in the first quarter, above the forecast for growth of 1.4%.

The world’s second-largest economy has struggled to mount a strong and sustainable post-COVID bounce, burdened by a protracted property downturn, mounting local government debts and weak private-sector spending.

Fitch cut its outlook on China’s sovereign credit rating to negative last week, citing risks to public finances as Beijing channels more spending towards infrastructure and high-tech manufacturing.

The government is drawing on infrastructure work – a well-used playbook- to help lift the economy as consumers are wary of spending and businesses lack confidence to expand.

WEAK MARCH DATA

The economy was off to a solid start this year, but March data on exports, consumer inflation, producer prices and bank lending showed that momentum could falter again and reinforced calls for more stimulus to shore up growth.

Indeed, separate data on factory output and retail sales, released alongside the GDP report, underlined the persistent weakness in domestic demand.

Industrial output in March grew 4.5% from a year earlier, compared with a forecast increase of 6.0% and a gain of 7.0% for the January-February period.

Growth of retail sales, a gauge of consumption, rose 3.1% year-on-year in March, against a forecast increase of 4.6% and slowing from a 5.5% gain in the January-February period.

 

Fixed asset investment grew an annual 4.5% over the first three months of 2024, versus expectations for a 4.1% rise. It expanded 4.2% in the January-February period.

“On the face of it, the headline number looks good… but I think the momentum is actually quite weak at the end,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets in Singapore.

Prior to the data release, analysts polled by Reuters expected China’s economy to grow 4.6% in 2024, below the official target.

Following the improved first-quarter GDP outcome, economists at ANZ raised their 2024 China growth forecast to 4.9% from 4.2% previously, while BBVA maintained their 4.8% growth projection.

Most investors appeared to take the headline GDP surprise with a pinch of salt given the weakness of the March data.

Traders said China’s state-owned banks were selling dollars to steady the yuan in the onshore market. China stocks .CSI300 were tracking broader markets lower as geopolitical tensions in the Middle East sapped risk sentiment.

CHALLENGES

The crisis in the property sector has been a major drag on China’s economy as it has rippled across business and consumer confidence, investment plans, hiring decisions and stock prices.

The March data highlighted the depth of the troubles in the sector, with investor confidence and demand still at a low ebb.

China’s new home prices fell at their fastest pace in more than eight years last month as debt troubles among property developers hurt demand.

Property investment slumped 16.8% year-on-year in March, worse than a 9.0% drop in January-February, while sales tumbled 23.7%, compared with a 20.5% fall in the first two months of the year.

With the Federal Reserve and other developed economies showing no urgency to start cutting interest rates, China may also face a longer period of subpar export growth in a further blow to policymakers’ hopes of engineering a strong economic recovery.

Adding to the challenge for China, authorities also have to contend with ongoing tensions with the United States over trade, technology and geopolitics.

Investors are looking to an expected Politburo meeting in April for clues on policy direction, though few analysts expect any major stimulus.

The People’s Bank of China (PBOC) has pledged to step up policy support for the economy this year, with markets betting on further cuts in banks’ reserve requirement ratio and interest rates.

Some analysts believe the central bank faces a challenge as more credit is flowing to production than into consumption, exposing structural flaws in the economy and reducing the effectiveness of its monetary policy tools.

Looking ahead, Jinyue Dong, senior economist at BBVA research, said he believes the “recovery has not got a solid foundation yet as the deep adjustment of real estate market and local government debt overhang still remain the main risks.”

“In addition, geopolitics risks mostly due to China-US confrontations before the US president elections will persist in the foreseeable future.”

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