Industrial growth slows as key sectors contract

Bangladesh's large industrial sector recorded a subdued performance in September, weighed down by contractions in major segments including clothing and textiles.

The slowdown comes despite earlier signs of momentum at the start of the fiscal year.

Large industries, which make up more than 11 per cent of the country's US$461 billion economy, expanded by only 2.43 per cent in September 2025, according to the Bangladesh Bureau of Statistics (BBS).

This marks a sharp moderation from nearly 7.0 per cent growth in July, the first month of the 2026 fiscal year, and more than 3.0 per cent in August.

The BBS industrial production index, a key barometer of economic activity, shows that seven of 23 major subsectors contracted in September, while the remaining 16 posted growth.

The readymade garment sector, the largest component of the index with a 61 per cent weight, recorded a 5.6 per cent year-on-year contraction.

Textiles, the second-largest segment with an 11.6 per cent weight, also shrank by more than 6.0 per cent over the same period.

These figures contrast sharply with the Bangladesh Purchasing Managers' Index (PMI), which rose 0.8 points to 59.1 in September, signalling a faster pace of expansion.

A striking outlier in the BBS data was tobacco manufacturing, which surged by more than 101 per cent, an unusually sharp rise for large-scale industry.

Other subsectors showing strong double-digit growth included basic metals (65.28 per cent), other transport equipment (42.87 per cent), motor vehicles (40.22 per cent) and food products (14.33 per cent).

By comparison, furniture manufacturing fell 11.28 per cent, leather and related goods declined 9.68 per cent, and electrical equipment dropped 4.83 per cent. Economists and manufacturers say the overall slowdown reflects the weak performance of clothing and textiles, which dominate the index and exert significant downward pressure when they decline.

They expect industrial activity in October and November to show improvement as some earlier bottlenecks, such as difficulties in opening letters of credit, have now eased.

"When the highest-weight sectors fall, the overall index inevitably slows - this indicates a broader deceleration in industry," said Dr M. Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh.

He added that genuine entrepreneurs are now accessing credit more easily, in contrast to previous years when "politically connected conglomerates borrowed heavily but diverted funds into unproductive uses and abroad".

"To my mind, genuine businesses are now getting loans, while the large corporates involved in plundering money are no longer in the market," he said.

"For this reason, private-sector credit growth appears lower, but the quality of lending has improved."

jasimharoon@yahoo.com