All industrial sectors but top-heavy behemoths record rebound

Growth in Bangladesh's large-scale manufacturing sector slowed but nearly all industrial sectors kept expanding as per February readings of official statistics.

Out of 23 major sectors, only two - the manufacturing of basic metals and   "other non-metallic mineral products" - contracted in February.

The Quantum Index of Large-Scale Manufacturing  (LSM) rose by 3.77 per cent year on year in February, down from 5.82 per cent in January and a robust double-digit growth of 10.37 per cent in December.

Large-scale manufacturing accounts for over 11 per cent of Bangladesh's GDP and serves as a key barometer of the country's industrial health.

According to  Bangladesh Bureau of Statistics (BBS), the overall LSM counts reached 223.76 points in February 2025, up from 215.63 in the same month of 2024.

The growth in February was largely driven by the ready-made garment (RMG) sector, which holds the highest weight in the index:  61 out of 100.

The sector expanded by 1.6 per cent during the month, but, due to its biggest weights in the basket, it is the key to determining the performance reflected in the index.

Due to its large share, any fluctuation in RMG significantly affects the overall index.

Among the sectors that posted strong growth, other transport equipment rose nearly 40 per cent, machinery and equipment grew over 35 per cent, food products increased by 27.4 per cent, and chemicals and chemical products 14.5 per cent, according to the BBS data.

The national statistical organisation,  BBS, also says  the electrical equipment grew 12.5 per cent, motor vehicles, trailers, and semi-trailers saw nearly 12-percent growth during the period under review over its corresponding period a year earlier.

Printing and reproduction of recorded media rose by 9.6 per cent, wood and wood products , excluding furniture, increased over 8 per cent, leather and related products grew by approximately 7.8 per cent and rubber and plastic products saw a 6.3-percent rise

The overall performance aligns with the Purchasing Managers Index (PMI), which stood at 64.6 in February - still in expansion territory, though indicating a slower pace of growth.

Industry-insiders attribute the slower pace in Q1 of the current fiscal year to political unrest, particularly the fall of the Awami League government amid the student-dominated uprising.

However, they note, industrial units, especially in the apparel sector, have been on a rebound since Q2 of this fiscal year. Still, higher lending rates, meant for taming high inflation, remain a major constraint on further business expansion.

Anwar-ul Alam Chowdhury (Parvez), President of Bangladesh Chamber of Industries (BCI), has identified elevated interest rates and weak purchasing orders as "key barriers to growth".

Syed Nazrul Islam, former leader of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Managing Director of Well Dress, says, "Clothing orders picked up after the first quarter and it continued, although some had shifted to India and Pakistan earlier."

Economists believe overall economic activity is gradually recovering, pivoted by a stabilised foreign-exchange market and rising domestic demand.

Dr Zahid Hussain, former lead economist at the World Bank's Dhaka office, acknowledges that the student-led uprising in mid-July caused temporary disruptions, but he remained optimistic about recovery.

"Inflation is still a challenge for industrial expansion, but it is gradually easing," he says, adding that the trend is reflected in improved export earnings.

Export earnings rose by 10.41 per cent to US$32.93 billion in the July-February period of the current fiscal year.

Dr M. Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh, attributes the February growth to seasonal factors and a strong rebound in the garment sector.

"Given that RMG accounts for over 60 per cent of the index, its performance is critical to overall manufacturing growth," he notes.

He forecasts that beverage manufacturing will grow more quickly in the coming months due to heatwaves caused by climate change.

Beverage production increased by 2.3 per cent in February.

jasimharoon@yahoo.com