Bangladesh’s readymade garment (RMG) sector is facing a severe crisis as foreign buyers, particularly from the US and European Union (EU), have cut 20 to 25 per cent of projected orders amid the ongoing US-Iran war.
Industry insiders said uncertainty and instability now dominate across small, medium and large factories, with some on the verge of closure, putting thousands of jobs at risk.
They added that even if the Middle East conflict ends immediately, it may take at least six months for the sector to recover.
According to data from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), around 45 per cent of RMG factories fall into the small and medium category, many of which lack strong financial resilience.
Without timely work orders, sustaining operational costs will become increasingly difficult for these businesses, the insiders added.
The sector has already been under strain, with over 350 factories closing between January 2024 and December 2025, leaving more than 200,000 workers unemployed, and the ongoing geopolitical tensions have deepened the crisis.
“Inflation in Bangladesh’s two key markets—the US and the EU—has risen from 2.4 per cent to 2.7 per cent due to the conflict, leading to a significant drop in apparel consumption, and buyers are adopting a ‘wait-and-see’ approach,” said BGMEA Senior Vice-President Inamul Haq Khan.
He added that the trend of reduced orders and lower price offers is likely to persist for at least the next six months, with small and medium enterprises facing severe challenges while larger factories may manage to survive.
Latest data from Eurostat reflects a broader slowdown in global apparel demand, with Bangladesh’s apparel exports to the EU declining sharply in January 2026.
In value terms, shipments fell by 25.25 per cent year-on-year to €1.43 billion from €1.91 billion a year earlier, a decline steeper than the EU-wide drop of 15.48 per cent to €7.03 billion during the same period.
Among major exporters, China retained the top position despite a 6.9 per cent fall to €2.22 billion, while exports from Turkey and Cambodia dropped by 29.12 per cent and 25.11 per cent respectively, and Vietnam saw a smaller decline of 7.34 per cent.
In terms of volume, Bangladesh exported 104.63 million kilograms of apparel to the EU in January, down 17.49 per cent from 126.80 million kilograms a year earlier, compared with an 8.36 per cent decline in global import volumes.
Unit prices have also fallen, with Bangladesh’s average price declining by 9.41 per cent to €13.66 per kilogram from €15.08 a year earlier, while the EU’s average import price fell by 7.76 per cent to €18.63 per kilogram.
Sovan Islam, managing director of Sparrow Group, told TIMES of Bangladesh that weak consumer demand in the US and Europe, persistent inflation, cautious purchasing by retailers, and increased competition from alternative sourcing countries are key factors behind the export decline.
He added that due to ongoing Middle East tensions, buyers are reducing orders by 20 to 25 per cent from projected volumes.
“If the crisis persists, exporters will have to navigate prolonged market volatility and sustained price pressures,” he said.
