Asia is in a rut. China’s economic growth is slowing, dragging down its neighbors, and Asian supply chains have struggled as demand for their products weakens, especially in tech. But as exports slump in economies across the region, Bangladesh has just recorded its highest monthly exports in history.
As Bloomberg reported, the South Asian nation brought in $3.2 billion from exports in Dec. 2015, a record for the country. The World Bank, meanwhile, predicts Bangladesh’s GDP will grow 6.7% in 2016, making it one of the world’s fastest growing economies. So what’s its secret? Insatiable global demand for cheap clothes, which made up $2.67 billion, or more than 83%, of that monthly record.
Bangladesh is the world’s second-largest clothing exporter, behind only China. It exports the majority of that clothing to the European Union and the US, and business has been good of late. US imports of apparel from Bangladesh, for instance, increased about 16% from Nov. 2014 to Nov. 2015, and H&M, which is one of Bangladesh’s top manufacturing customers, just keeps growing. Clothing has made up an ever-larger share of Bangladesh’s total exports for years, reaching about 81.7% last year—and as the garment industry grows, the overall economy grows with it.
Garment manufacturers seem to be warming to Bangladesh again after the deadly Rana Plaza factory collapse in 2013. But there are still ethical concerns. For starters, part of what makes the country so attractive as a place to manufacture is that wages there are incredibly low, and too many of the factories are still unsafe. Workers often face abuse if they complain.
Experts also say the country needs to diversify its exports, and should start moving up the value chain into higher-end products such as electronics if it really wants to develop.
One challenger to Bangladesh’s growth could be Vietnam. It’s become another top location for apparel manufacturing as brands look for cheap alternatives to China, which has seen wages rise significantly in recent years. Even though it just saw its lowest export growth in years last year, this year could be quite different. If the big Trans-Pacific Partnership trade deal goes through, Vietnam could become an even more attractive spot for sourcing, especially for US brands. Vietnamese officials say such deals could help boost footwear exports from Vietnam by 20%.