Sunday, August 17, 2008

Sweater exports mark rapid rise in Bangladesh

Refayet Ullah Mirdha

Sweater item exports are increasing rapidly as Bangladesh has become a lucrative destination for readymade garments (RMG) outsourcing on the appreciation of Chinese currency and increase in workers' wages in competing countries, according to industry insiders.The item manufacturers said orders from buyers are huge, as many RMG manufacturing countries are now reluctant to make sweaters because production of the item is more labourious than other garments.Many Chinese apparel makers have recently either switched over to other business or suspended the production on a decline in buying orders and higher cost of doing business due to a hike in workers' wagesExport Promotion Bureau (EPB) data shows sweater products worth US$1.47 billion were exported in the immediate past 2007-08 fiscal year (FY) against $1.24 billion exports in FY 2006-07.Meanwhile, many RMG factory owners have enhanced their capacity, or opened up new factories to cope with the growing demand for sweater items from foreign buyers. SQ Group, one of the largest sweater exporting factories, has already signed a joint venture agreement with the UK-based Crystal Martin Group, a sweater factory, to produce the export item in the country.The joint venture unit is expected to go into production next month, said Shah Nawaz Mohammad Sabbir, a senior manager of the SQ Group. "The SQ Group has already four sweater factories in operation. It has a plan for further expansion shortly to meet the buyers' growing demand," he added, pointing to the fact that foreign buyers like Bangladesh's sweaters because of better quality in stitching and good finishing.Dragon, Tupa, Starlight and Diganata groups are some other major players in sweater manufacturing. In Bangladesh, the February-September period is the peak season for sweater productionWal-Mart, Marks and Spencer, GAP, Tesco, H and M, JC Penny and Zara are the major buyers of Bangladeshi sweater products, industry people said."We expect the overall exports of the item to cross $2 billion mark this fiscal,” said Shahidul Islam, managing director of Rupa Group.Shahidul, also the vice-president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said at present there are 680 sweater factories across the country.He said in most cases designs are supplied by buyers as attractive designs are yet to be developed here.EPB said the country fetched US$14.110 billion from overall exports in FY 2007-08, registering a 15.87 percent growth over the previous fiscal. Of the total export earnings, only woven and knitwear, the two sub-sectors of RMG, fetched $10.699 billion during the last fiscal.

Sour economy top issue in US presidential race

AFP, Washington

The US economy has become the number-one issue of November's fast-approaching presidential election, and whoever ends up controlling the White House will face pressing budget and fiscal challenges. Some analysts say a flailing economy can benefit a challenger from the party that does not control the White House as voters can assign blame for an economic downturn to a president's party, as occurred in the 1992 failed reelection bid by then-president George Bush, President George W. Bush's father. "When it comes to voting, unemployment doesn't matter. Inequality doesn't matter (in the United States). Growth of real after-tax income does matter. The stock market does matter," said Alan Reynolds, a senior fellow at the Cato Institute, a free- market think tank. Reynolds said a rising stock market can boost the reputation of the party in power, but he said the perceived weakenss of the US economy at present could benefit the Democratic presidential hopeful, Senator Barack Obama. In such a climate, it is not surprising that Obama and his Republican rival, Senator John McCain, have sparred hotly over economic matters, taxes and high gasoline prices. Obama has called for a second economic stimulus package while McCain says he favors fresh tax cuts. Each candidate insists his plans would help fire up rocky economic growth. Americans are very troubled about their economic well-being, according to the results of a Pew poll published in late July which showed that 54 percent of respondents think the US is in recession while 18 percent view it as a depression.

US housing market recovery not until 2009

AFP, Washington

As the US economy appears more than ever linked to the health of the housing market, analysts see no end to falling prices or recovery in the sector before 2009. After several years of a sizzling boom, housing prices in the United States have fallen for the past year and a half, according to the closely watched S&P/Case-Shiller index. In May, prices fell a record 16 percent from a year ago. But for the majority of analysts, the price decline still is not enough to put the sector on the road to recovery. "Home prices in the US are likely to start to stabilize or touch bottom sometime in the first half of 2009," former Federal Reserve chairman Alan Greenspan said Thursday. But "prices could continue to drift lower through 2009 and beyond," he added. Treasury Secretary Henry Paulson regularly repeats that the real-estate sector presently is the biggest danger for the US economy. Paulson in late July warned that foreclosures and the number of existing homes for sale "are likely to remain substantially elevated this year and next and home prices are likely to decline further on a national basis." Several factors are at work. Housing prices, although lower, are still far from reaching pre-boom levels, according to a recent survey by TD Bank Financial Group. Today's home prices are roughly at mid-2004 levels, while the S&P/Case- Shiller index shows they are still nominally 34 percent higher than 2002 prices. "The correction isn't over," the TD Bank analysts said, adding that prices have further to fall, particularly in "cities such as Los Angeles, Las Vegas, and Miami which saw the largest price gains." The inventory of unsold homes on the market is so high -- 11 months' supply for existing homes, 10 for new homes-that sellers will have to lower their expectations before the market can return to normal, which analysts generally see as a five- month supply. "The rising share of foreclosed homes in overall sales bodes negatively for home prices," said Ethan Harris, chief US economist at Lehman Brothers, who sees prices falling between 25 and 30 percnt in the correction phase of a cycle he sees ending in late 2009. In fact, the owners of foreclosed homes are often banks, which today hold a sixth of the homes on the market, according to RealtyTrac, a real-estate industry data firm. The banks have not been shy about disposing of these distressed assets. The Wall Street Journal this week reported on a house in Corona, California, that was sold for 198,000 dollars by a subsidiary of Credit Suisse and which was bought for 450,000 dollars in December 2006. Another factor weighing on housing prices is the growing difficulty in obtaining a bank loan, and not just for high-risk borrowers. In the second quarter, 75 percent of US banks tightened their lending conditions on standard mortgages, home loans to borrowers with good credit histories, the Federal Reserve reported recently. And the fragile economy's woes-rising unemployment, inflation-eroded purchasing power and financial turmoil-hardly inspire optimism.