Bangladesh, often celebrated as a development success story, finds itself at a critical juncture as it grapples with a series of economic challenges. The banking sector, one of the most affected one under the last regime, losing a formidable amount of assets, has hit hard the entire economy of the country. As per the new governor of Bangladesh Bank, not less than $17 billion was stolen from the banking channel, let alone other areas of the economy. The new government under the leadership of Nobel Laureate and prominent economist Professor Dr Mohammad Yunus has taken necessary steps and safeguards to protect the already bleeding economy, however, 17 year scar is not going to be healed overnight. Such domestic fiscal strains with global economic uncertainties, the country’s resilience is being put to the test. Despite these hurdles, the nation’s textile and garment industry—its economic backbone—continues to play a pivotal role, navigating its own set of challenges while maintaining its significance on the global stage.
Economic Overview: A Nation Under Pressure
In recent years, Bangladesh has experienced robust economic growth, averaging over 6% GDP growth annually before the COVID-19 pandemic with a 7.1% in 2022. However, 2023 hit hard with the global economic turmoil due to the multiple war breaking out resulting in a lowered economic growth of 5.8%. Now, 2024 is not different and continuing the sufferings, 2025 is also forecasted to register a below 6% growth at 5.1% by ADB.
Plus, rising inflation, supply chain bottlenecks, and a depreciating currency have all contributed to further economic strain. On paper, the inflation is at 9.7% in 2024, which was only 6.2% in 2022; however, in reality, the heat of inflation is far beyond as common people toil hard to meet their ends. 2025 is forecasted to have even more elevated inflation at 10.1%.
The country’s forex reserves have come under pressure, shrinking from over $40 billion in 2021 to approximately $22 billion in 2024. The depreciation of the Bangladeshi Taka against the US Dollar has pushed import costs higher, while export revenues, though resilient, are struggling to keep pace with rising expenses. In 10 years from 2013 to 2024 the exchange rate for BDT to USSD has grown from approx. 77 Taka to approx. 120 Taka for every USD. Specifically in the last five years it grew exponentially from 85.80 Taka to 120.00 Taka, a whopping 41% increase.
Amid all the negative metrics and unconducive circumstances, Bangladesh still stands out as one of the better performers in the region. Only India registered better economic growth than Bangladesh in 2024, highlighting the resilient manufacturing industries in the country, specifically the textile and garment industry.
The Textile and Garment Industry: Resilient Amidst Adversity
The year 2024 has been a mix of challenges and resilience for Bangladesh’s economy, with the textile and garment industry remaining a cornerstone of its export earnings. Despite global economic uncertainties, inflationary pressures, and internal political challenges, the country’s export sector has demonstrated steady growth, driven by the readymade garment (RMG) industry, which accounts for over 80% of total exports.
Bangladesh’s total exports reached $50 billion in 2024, an 8.3% year-on-year increase. This growth was buoyed by a strong performance in December, with $4.62 billion in export receipts, marking an 18% year-over-year rise. Garment exports have been the primary driver, reaching $43.85 billion during July 2023-May 2024, a 2.86% increase over the previous fiscal year.
The knitwear sector outperformed woven garments, with $24.7 billion in exports (up 6.15%) compared to $19.1 billion for woven garments (down 1.09%). However, RMG exports fell short of the $47.47 billion target for the fiscal year, reflecting a 7.63% gap.
Export Trends by Market
- United States: Apparel exports to the US showed a mixed trend, with a significant 41.6% year-on-year growth in November 2024, reaching $614 million. However, cumulative exports to the US for January-November 2024 declined by 0.44% compared to the previous year, with challenges like long lead times, high production costs, and energy shortages impacting competitiveness.
- European Union: Exports to the EU experienced slower growth due to inflationary pressures and reduced consumer spending. Nevertheless, the demand for value-added items like suits, lingerie, and jackets remains promising.
- Emerging Markets: Non-traditional markets such as Canada, Australia, and Japan have emerged as growth areas, with increased demand for both apparel and leather goods.
Sectoral Highlights
- Home Textiles and Cotton Products: Home textiles faced a 24.29% decline, while exports of cotton products, including yarn and fabrics, rose by 34.04%.
- Leather and Footwear: The leather industry grew by over 30%, driven by bulk orders for winter footwear from Europe and Japan.
- Other Products: Non-leather footwear exports surged 39.10%, and plastic goods exports increased by 29.72%.
To counter these challenges, Bangladesh has launched the National Export Policy 2024-27, which aims to double annual export earnings to $110 billion by FY27. Key initiatives include diversifying markets, promoting value-added products, and investing in sustainable and energy-efficient practices.
Outlook for 2025
The outlook for Bangladesh’s textile and garment industry is cautiously optimistic. As inflationary pressures ease in major markets and international demand rebounds, the country is well-positioned to expand its market share. Investments in sustainability, policy reforms, and the growth of non-traditional markets are expected to drive future growth.
Despite a challenging year, the industry’s resilience showcases its role as a vital contributor to Bangladesh’s economy and a trusted partner for global buyers. With continued focus on innovation and competitiveness, the country’s textile and garment sector are poised for steady progress in the years to come.
