The indefinite shutdown of government services in the US, the country’s largest export destination for garment products, is bad news for the sector.
Due to the failure to agree on a budget size for fiscal 2013-14 that began yesterday, the Obama administration has decided to shut its non-essential services, meaning up to 1 million federal employees face unpaid leave with guarantee of back pay once the deadlock is over.
Ahsan H Mansur, executive director of Policy Research Institute (PRI), said the shutdown would have a very real economic impact on a good number of people right away.
“Their purchasing capacity will also be squeezed, and this will be felt by the supplying countries like Bangladesh.”
But, if the problem is resolved in a short time, there will not be any impact, Mansur told The Daily Star.
The last time the politicians on Capitol Hill ran into a stalemate over the budget was back in 1995, during Bill Clinton’s first term. The shutdown then ran on for a record 21 days.
“I hope the Obama administration will fix the problem as soon as possible.”
However, Mohammed Helal, a teacher of economics at the University of Dhaka, said garment exports would not be affected as Bangladesh is “still a champion of basic garment production”.
He said the country’s garment exports to the EU and the US, the two main destinations, were unhurt even during the financial crisis of 2007-08, the worst in recent times, due to the basic nature of the wares.
“Even during crises, people still have to purchase basic clothing,” he added.
Anwar-Ul-Alam Chowdhury Parvez, a former president of the Bangladesh Garment Manufacturers and Exporters Association, echoed Helal’s views.
“The demand for basic garment items always remains upward,” he said.
Bangladesh exports more than $5 billion worth of goods to the US market annually, of which 95 percent include apparel items.
Source: The Daily Star
