Bangladesh’s apparel sector is under pressure from sluggish orders in the US and Europe, rising production costs, energy shortages, and financial constraints, according to industry insiders.
They further said that growing competition from China and India, along with the impending LDC graduation, could put additional pressure on the sector, though exports may rebound once international buyers adapt to the evolving global trade environment.
Despite being the backbone of the country’s export earnings—contributing over 80 percent of total exports—the RMG sector’s growth momentum has weakened amid global economic uncertainty and reduced buyer demand, they added.
“Sluggish orders from key Western markets, energy shortages, and financial constraints are the key reasons behind the slower pace of apparel exports during this period,” said Sparrow Group managing director Shovon Islam.
The performance of the apparel sector has a decisive influence on the country’s overall export growth.
According to data from the Export Promotion Bureau (EPB), RMG exports totalled $12.99 billion, reflecting a modest 1.40 percent year-on-year growth during the first four-month (July–October) period of the current fiscal year.
Bangladesh exported $12.81 billion worth of apparel in the same period last year.
This corroborates the trend, showing that garment exports in October of the current fiscal year fell by 8.39 percent compared to the same month last year.
In October 2025 alone, total RMG exports amounted to $3.02 billion, marking an 8.39 percent year-on-year decline from October 2024. Bangladesh exported apparel worth $3.29 billion during the same month last year.
By category, knitwear exports dropped 10.76 percent to $1.66 billion, and woven exports decreased 5.33 percent to $1.36 billion.
RMG exports, however, increased by 6.35 percent in October from the previous month (September) this year. Bangladesh exported apparel worth $2.89 billion in September.
Former BGMEA president Anwar-ul Alam Chowdhury (Parvez) said that Bangladesh’s main export markets—the US and Europe—have both been affected.
“Due to Trump-era tariffs, product prices in the US have risen, reducing buyers’ purchasing power and apparel demand. Meanwhile, China and India, facing similar tariffs, are redirecting exports to Europe at lower prices, hurting our market share there,” he explained.
The RMG sector’s performance is closely tied to back-to-back Letters of Credit (LCs).
According to Bangladesh Bank, the opening of such LCs fell by 10.63 percent in the first quarter (July–September) of the current fiscal year.
Similarly, LC settlements for capital machinery, intermediate goods, and raw materials have also declined.
In the first quarter of the 2025–26 fiscal year, LC settlements for capital machinery dropped by 11 percent. In the 2024–25 fiscal year, imports of these essential industrial inputs had already fallen by 25.42 percent.
During the first quarter of the current fiscal year, LC settlements for intermediate goods and raw materials declined by 17.62 percent and 1.04 percent, respectively.
BKMEA President Mohammad Hatem said that the RMG sector is experiencing negative growth, with most international buyers cutting new orders and attempting to shift part of a 20 percent reciprocal duty onto Bangladeshi suppliers.
“Exporters cannot bear this additional burden amid rising production costs and tariff pressures. The industry and economy are now in the ICU, with around 80 percent of factories operating at a loss,” he said.
Hatem also warned that competition from China and India in the EU market could prolong the slowdown but hoped exports would recover once buyers adjust to the new tariff environment.
He further cautioned that LDC graduation could worsen the situation unless the government delays the process and provides stronger policy support to the export sector.
