Bangladesh Export Growth Slows Amid Global Demand Dip and Energy Challenges

Bangladesh’s export earnings, a vital pillar of its economy, have shown a notable slowdown in recent months, according to the latest data from the Export Promotion Bureau (EPB). The country, which is the world’s second-largest apparel exporter after China, witnessed a year-on-year growth of just 4.2 percent in the first quarter of the current fiscal year, a significant drop from the double-digit growth rates seen in the previous year.

The deceleration is primarily attributed to a softening of global demand, particularly in key markets such as the United States and the European Union, which together account for over 70 percent of Bangladesh’s garment exports. Retailers and brands in these regions are grappling with high inventories and cautious consumer spending due to persistent inflation and economic uncertainty. This has led to a reduction in new orders, impacting Bangladesh’s factories, which are already operating under thin margins.

Adding to the pressure, the country has been facing a severe energy crisis. A shortage of natural gas, which powers the majority of textile mills and garment factories in industrial zones like Gazipur and Narayanganj, has forced many units to operate at reduced capacity. The government has implemented load shedding and gas rationing to manage the supply, but factory owners report that production has been hampered, leading to delays in shipments and increased costs. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has urged the government to prioritize gas supply for the export-oriented sector to prevent further losses.

Despite these challenges, there are pockets of resilience. Exports of non-garment items, such as leather goods, jute products, and pharmaceuticals, have shown steady growth. The leather sector, for instance, posted a 12 percent increase in exports, driven by demand for finished leather and leather footwear in international markets. Jute and jute goods, a traditional export, also saw a modest uptick, buoyed by global interest in eco-friendly packaging materials. However, these sectors remain relatively small compared to the garment industry, which constitutes over 80 percent of total exports.

The government has taken steps to diversify the export basket and explore new markets. Trade agreements with countries like India and China, as well as efforts to strengthen ties with emerging economies in Africa and the Middle East, are part of a long-term strategy to reduce dependence on traditional Western markets. Additionally, the recent inclusion of Bangladesh in the list of developing countries that will continue to enjoy duty-free access to the EU market under the Everything But Arms (EBA) initiative until 2029 has provided some respite for garment exporters.

On the international front, the global textile trade is undergoing a shift. Competitors like Vietnam and Indonesia are gaining ground, partly due to their better energy security and more diversified supply chains. Bangladesh, however, retains its competitive edge in terms of low labor costs and a skilled workforce. Industry experts emphasize that addressing the energy crisis and improving infrastructure, such as the construction of new economic zones and the expansion of the port facilities in Chattogram, are critical to sustaining export growth.

Looking ahead, the outlook for Bangladesh’s exports remains mixed. The immediate challenges of weak demand and energy shortages are likely to persist through the end of the year. However, the approaching holiday season in Western markets could provide a temporary boost to orders. The government’s recent allocation of subsidies for export-oriented industries and the central bank’s efforts to stabilize the foreign exchange rate are expected to offer some support. For now, the country is navigating a cautious path, balancing the need to maintain its market share while adapting to a changing global economic landscape.