Slower remittance inflow poses downside risks: Moody’s

Strong RMG supports Bangladesh’s sovereign credit profile

Bangladesh's (Ba3 stable) sovereign credit profile is supported by the robust growth of an economy that is bolstered by garment manufacturing industry exports, says Moody's Investors Service in a report. 
However, weakening inflows of remittances from overseas-based workers could hurt consumption, reports UNB.
The readymade garment industry makes up about 70 per cent of Bangladesh's total merchandise exports, as measured in local currency terms, and also accounts for significant foreign investment inflows, says the report released on Sunday.
While the agricultural sector is still the biggest employer in Bangladesh, the garment industry employs over three million workers and offers continued opportunity for labour productivity gains that will support future economic development and growth.
"Bangladesh will continue to invest in its garment manufacturing sector to capitalise on its strong comparative advantage of abundant low-cost labour," said William Foster, a Vice President and Senior Credit Officer at Moody's. "It'll remain a leading global supplier of basic garments and the industry will continue to drive the nation's growth, exports and job creation."
The country's focus on low-value garment exports helps to insulate it from the impact of higher trade tariffs that could result from greater protectionism globally.
Nonetheless, while Bangladesh's garment industry benefits from some of the lowest wage levels in the world, the country's overall economic competitiveness lags that of its peers such as Vietnam (B1 positive), Cambodia (B2 stable) and Sri Lanka (B1 negative).
When factoring in the quality of its physical infrastructure, skill levels and transparency of the business environment, the country's low competitiveness hampers the ability of its economy to absorb shocks.
In addition to the garment sector, remittances from overseas workers contribute to Bangladesh's economic growth by supporting household income and consumption.
Remittances accounted for about 6.7 per cent of the country's GDP in the fiscal year 2016.

Slower remittance inflow poses downside risks: Moodys

Strong RMG supports Bangladeshs sovereign credit profile

Bangladeshs (Ba3 stable) sovereign credit profile is supported by the robust growth of an economy that is bolstered by garment manufacturing industry exports, says Moodys Investors Service in a report. However, weakening inflows of remittances from overseas-based workers could hurt consumption, reports UNB. The readymade garment industry makes up about 70 per cent of Bangladeshs total merchandise exports, as measured in local currency terms, and also accounts for significant foreign investment inflows, says the report released on Sunday. While the agricultural sector is still the biggest employer in Bangladesh, the garment industry employs over three million workers andoffers continued opportunity for labour productivity gains that will support future economic development and growth. Bangladesh will continue to invest in its garment manufacturing sector to capitalise on its strong comparative advantage of abundant low-cost labour, said William Foster, a Vice President and Senior Credit Officer at Moodys. Itll remain a leading global supplier of basic garments and the industry will continue to drive the nations growth, exports and job creation. The countrys focus on low-value garment exports helps to insulate it from the impact of higher trade tariffs that could result from greater protectionism globally. Nonetheless, while Bangladeshs garment industry benefits from some of the lowest wage levels in the world, the countrys overall economic competitiveness lags that of its peers such as Vietnam (B1 positive), Cambodia (B2 stable) and Sri Lanka (B1 negative). When factoring in thequality of its physical infrastructure, skill levels and transparency of the business environment, the countrys low competitiveness hampers the ability of its economy to absorb shocks. In addition to the garment sector, remittances from overseas workers contribute to Bangladeshs economic growth by supporting household income and consumption. Remittances accounted for about 6.7 per cent of the countrys GDP in the fiscal year 2016.