Bangladesh Garment Industry Sees Mixed Progress Amid Global Demand Shifts

DHAKA, Bangladesh — Bangladesh’s garment industry, the world’s second-largest apparel exporter after China, is navigating a period of cautious optimism as international buyers adjust sourcing strategies and local manufacturers grapple with compliance, labor, and energy challenges. The sector, which accounts for over 80 percent of the country’s exports, remains a cornerstone of the national economy, employing roughly four million workers, mostly women.

Recent data from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) shows that apparel exports rose by approximately 10 percent in the first half of the current fiscal year compared to the same period last year, reaching $23.5 billion. This growth is driven by increased orders from major brands such as H&M, Zara, and Walmart, which are diversifying supply chains away from China due to geopolitical tensions and rising production costs there.

However, the industry faces persistent hurdles. A series of labor protests in key manufacturing hubs like Gazipur and Savar in late 2024 highlighted ongoing discontent over wages and working conditions. The government raised the minimum monthly wage for garment workers to 12,500 taka (about $110) in December 2023, a 56 percent increase, but many workers argue it remains insufficient amid inflation that has pushed up food and housing costs by over 9 percent.

Factory owners, meanwhile, express concern over rising operational costs, including higher energy prices and a recent increase in bank interest rates. Many factories operate on thin margins, and the pressure to maintain low prices for international buyers often conflicts with compliance demands from Western retailers. A BGMEA spokesperson noted that factories are investing in green technologies and safety upgrades, partly in response to the 2013 Rana Plaza disaster, but these costs are difficult to absorb without sustained orders.

On the international front, Bangladesh is benefiting from the ongoing “China Plus One” strategy adopted by many global fashion brands. Buyers are also looking to Bangladesh for its competitive labor costs and improved lead times. However, the European Union, Bangladesh’s largest export destination, is tightening due diligence regulations, requiring supply chain transparency on environmental and labor standards. The EU’s new Corporate Sustainability Due Diligence Directive, expected to phase in from 2025, could impose additional compliance costs on Bangladeshi factories.

Industry experts point to the need for greater value addition. Currently, Bangladesh specializes in basic woven and knitwear items, with limited capacity for high-margin products like technical textiles or synthetic blends. The government has set a target of reaching $50 billion in garment exports by 2030, but achieving this will require upgrading skills, improving logistics, and diversifying product lines.

Another concern is energy reliability. Frequent load-shedding in industrial zones disrupted production in 2023 and 2024, though the situation has improved with increased gas supply and new power plants. The Bangladesh Power Development Board reports that industrial power cuts have fallen by 30 percent year-on-year, but factory owners remain wary of summer peaks.

Despite these challenges, the garment sector remains resilient. Many factory owners are optimistic about new markets, including Japan, South Korea, and Australia. A recent trade agreement with China is also expected to boost imports of raw materials and machinery, lowering costs for local producers.

As the industry evolves, the balance between growth and social responsibility will be critical. International observers will closely watch how Bangladesh manages worker rights, environmental sustainability, and competitiveness in a rapidly changing global trade landscape.