July, it seems, will go down the annals as the month in which the Bangladesh economy lifted the pall of gloom brought on by the global coronavirus pandemic.
Soon after the outbreak of coronavirus across the globe, it was feared that Bangladesh's exports and remittance, the two pillars of the economy, would take a massive hit. But July's data of the two indicators suggests the fears were outsize.
Exports fetched $3.9 billion in July, up 44.4 percent from the previous month and 0.60 percent from a year earlier, according to data released by the Export Promotion Bureau yesterday.
After declines in four consecutive months since February, July's export data "comes as a big relief", said Zahid Hussain, former lead economist of the World Bank's Dhaka office.
"This much recovery amid the pandemic was unexpected," said Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh.
What is more remarkable is July's inflows beat the target for the month by 13.4 percent.
"It is a remarkable achievement given the disruptions to production and trade caused by the virus," Hussain said.
The charge was led by the garment sector, which accounts for about 84 percent of the country's total export earnings.
Garment shipments raked in $3.2 billion, which is 14.1 percent more than the target set by the commerce ministry for July. In July last year, apparel exports stood at $3.3 billion.
However, Mohammad Abdus Salam, acting president of the Bangladesh Garment Manufacturers and Exporters Association, is not jubilant about the development.
"Had the sector's export earnings soared 25 percent or more, we could have said the garment sector performed well."
Besides, July's earnings were higher because most of the shipments that were stuck between April and May for the lockdown all over the world were dispatched in the last two months, he told The Daily Star over the phone.
Salam though remains cautiously optimistic.
Bangladesh is strong in basic garment items, whose demand held up amid the pandemic in the Western world, he said, adding that the reopening of stores in the EU and the US is giving hope to the apparel exporters.
"We are expecting that the garment export will rebound strongly from September onwards because the international retailers are coming back with work orders and they are mainly for basic garment items," Salam added.
Exports to European and non-traditional markets appear to have played the dominant role in the rebound, Hussain said, adding that retail sales in the eurozone have recovered significantly since May to near pre-lockdown levels.
"Governments in Europe have spent billions to limit the damage to employment. The good news is France, Germany, and most of Europe have extended short term work support schemes through the rest of 2020. This will help sustain the recovery in consumer spending."
Credit must also be given to the prompt support provided by the Bangladesh government to keep the supply chains flowing and exporting enterprises afloat through the subsidised credit for wage payments, Hussain said.
In July, jute and jute goods, home textiles, agricultural products, primary and pharmaceutical product shipments picked up too.
Jute and jute goods exports soared 38.2 percent to $103.5 million, homes textiles 42.5 percent to $94 million, agriculture products 30.9 percent to $101.1 million, and pharmaceuticals 49.1 percent to $17.1 million.
"The pharmaceutical industry appears to have taken advantage of the increased demand due to the virus," he said.
Mansur too said if the momentum of July's non-garment exports is leveraged then the outsize reliance on the apparel sector can be toned down.
REMITTANCE CONTINUES TO BEAT ALL ODDS
The positive newsflash comes on the heels of another sanguine development the previous day.
After sending home a record $18.2 billion last fiscal year that ended on June 30, migrant workers sent in another $2.6 billion in July, which is a record for a single month.
July's inflows were up 62.5 percent from a year earlier and 42.1 percent from the previous month, according to data from the Bangladesh Bank.
The robust flow of remittance pushed foreign exchange reserves past the $37 billion-mark for the first time in history.
The developments are in stark contrast to the prediction of economists.
The Asian Development Bank in a report earlier this week said Bangladesh would be among the five worst-affected developing Asian economies in terms of remittance inflows.
In the worst-case scenario, Bangladesh's remittance will decline 27.8 per cent from its 2018 level. In 2018, Bangladesh received $15.5 billion in remittance.
The "worst-case" scenario assumes that the domestic outbreak control and resumption of economic activities take a year. It also assumes that the economic impact of COVID-19 persists throughout the year and dissipates halfway in the last 3 months of the outbreak.
Mansur said the non-resident Bangladeshis (NRBs) in the EU and the US had a substantial role to play in the torrent of inflows in the past couple of months.
Since the retail stores were largely shut between March and May, the expatriate Bangladeshis did not spend much, leaving them with unexpected but welcome stashes of money.
Given the near-zero interest rates in much of the Western world, the NRBs felt their savings would yield greater returns if parked with banks in their home country, where the interest rate is 6 percent, Mansur said.
Finance Minister AHM Mustafa Kamal, who recently returned from his month-long trip from the UK, credited the 2 percent cash incentive on remittance that he introduced last fiscal year for the surge in inflows that are beating all odds.
Now, he's eyeing $3-5 billion more remittance from last fiscal year, said a finance ministry press release on Monday.
All steps will be taken to bring in remittance through the legal channel, he added.
Md. Abdul Halim Chowdhury, managing director of Pubali Bank, however, remains less sanguine given the hordes of returning migrant workers and no new migration for the best part of this year.
And thanks to the 2 percent cash incentive on remittance inflows from abroad, returning migrant workers are wiring their savings in advance instead of bringing it with them in cash.