Slowing garment export growth in Bangladesh is intensifying the policy debate between the industry and the government. As the world's second-largest garment exporter, Bangladesh has long benefited from low-cost production, but that advantage is eroding. The BGMEA broadly welcomed the proposed National Budget for 2026-27, calling it people-oriented and business-friendly, yet the underlying message is one of concern over decelerating exports.
Background
Official data shows that in the first seven months of fiscal 2025-26, Bangladesh's garment exports grew only 5.2% year-on-year, sharply down from over 15% in the same period last year. The slowdown is mainly attributed to weak demand from the EU and the US, which together account for nearly 80% of its garment exports. Meanwhile, domestic production costs are rising. A 56% minimum wage hike in 2025, coupled with multiple increases in electricity and gas tariffs, is squeezing factory margins. The BGMEA has urged the government to provide lower lending rates, stable energy supply, and more flexible labor policies to help the industry adjust.
Industry Impact
Bangladesh's slowdown is not isolated—Vietnam and Cambodia face similar pressures, but Bangladesh's higher dependence on Western markets makes it more vulnerable. For global buyers, this means rising supply chain risks. In 2025, Bangladesh's average FOB price rose by about 8% year-on-year, compared to just 3% in Vietnam, eroding its cost advantage. Some orders may shift back to China or to African sourcing destinations. Large Bangladeshi factories with automation and scale can still compete, but small and medium-sized factories are caught between order shortfalls and rising costs. The BGMEA's budget advocacy is essentially a survival plea for these smaller players.