Euro zone deflation blamed for having bad time for leather goods exports to EU.

Exports of the country's leather goods have been facing worsening market condition in the European markets due to euro zone deflation, industry insiders said.

"During the fiscal year (FY) 2014-15, we have been facing deteriorating market conditions in Europe, our major market, due to deflation in European Union (EU)," an exporter told the FE.

As part of a global value chain, he said, they remain highly competitive markets from relatively weak position. "Since more than 60 per cent of Bangladeshi leather sector exports go to EU markets, this is a major challenge for us," he added.

In the face of such impediment, leather sector narrowly managed to sustain positive growth, he said, adding that leather sector's exports grew by 0.56 per cent in the last FY.

Countries like India and Pakistan which were hit by the global economic recession and euro zone crisis have taken a host of policy measures to help protect their export sectors, a footwear exporter said.

These measures include raising facilities for leather goods and footwear industry, lowering bank interest rate, credit link capital subsidy and providing export cash incentives. "It is highly important to devise all necessary support mechanisms in order to protect our existing export market share," he added.

Otherwise, he said, they would lose competitiveness in the export market that can further slow down the growth of a highly potential sector.

"Under such circumstances, we seek government support to our export sector in the interest of product diversification, value addition and job creation with the continuation of 15 per cent cash incentives for leather goods and footwear sector," he added.

According to Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB), leather sector's exports were severely affected in last FY.

The total exports suffered a setback and under-achieved by 19.09 per cent against the strategic target. The export target for the FY 2014-15 was U$ 1.39 billion, but export performance was only U$ 1.13 billion.

For reference please browse into the following link: