Manufacturing majors rebound

Bangladesh’s large-scale manufacturing sector grew 13.7 per cent in December in a rebound from the global pandemic-led slump while upper-class food supplements, refined petroleum and tobacco topped the growth flowchart.

Latest data released by the Bangladesh Bureau of Statistics (BBS) show such fairly robust- growth trend comparative of previous indicators. Economists and manufactures, however, points at challenges stemming from inflation, high price of raw materials for dollar dearth and so.

The BBS data show that the country’s economic activity remained more buoyant in the last month of 2022 over its corresponding period a year earlier.

This index had contracted more than 2.0 per cent in the first quarter (July-September) of the current fiscal year (FY 2022-23).

However, this time beverage industry grew steeply by 580 per cent, manufacturing of coke and refined petroleum by nearly 200 per cent, tobacco more than 45 per cent, textiles by nearly 8.0 per cent, RMG more than 17.4 per cent, leather and related goods 9.4 per cent, manufacture of chemicals and chemical products by 23.9 per cent, manufacturing of furniture by more than 21 per cent and printing and reproduction of recorded media by 25.6 per cent.

Economists and manufactures say that this rise means that economic activity has started in full swing.

But they expressed concern over higher inflation and higher prices of raw materials as challenging factors before boom in the industrial output.

Dr M. Masrur Reaz, chairman of Policy Exchange of Bangladesh, takes the turnaround as a good indication as it happened because there is no covid-related problem in the economy.

“To my mind, many sectors of the large industry have returned to pre-covid level of growth,” he told the FE.

He says there was some significant growth of beverage industry in the period under review as the social gatherings in December may have been one key reason.

“We consume both pure bottled waters and other beverages during social gatherings so, I think, for this reason its [beverage] growth peaked in December.”

Sources aired concern about many sectors’ possible slowdown in coming months due to the prolonged war in Ukraine as apparel and other exports may falter.

Dr Zahid Hussain, former lead economist of the World Bank, said, “Higher inflation usually discourages expansion while the volatility on the forex market forced many to go slow.”

He also observed that higher inflation forces many to consume less, and consumption contraction weighs down demand for goods.

Syed Nazrul Islam, first vice president of BGMEA, says up to December last there had been positive growth in the apparel industry — the country’s main export sector.

“We actually took order four months back, so we had double-digit growth up to December last.”

He, however, hinted that after February order for RMG products remained much lower and it would continue up to June next.

“Our growth may be minus from February as a result of the war in Ukraine,” Mr. Islam told the FE on Saturday.

The readymade garment sector or RMG, accounting for more than 80 per cent of export share, grew over 17 per cent in December.

Aameir Alihussain, managing director of BSRM Group — the largest MS rod maker in Bangladesh-says production is “okay but sales dropped” in recent months as many shy away from making investment in the construction sector.

“Actually, our production was huge up to July as there was adequate demand for our rods, but now it has slowed down significantly.”

Mr Aameir also points out load-shedding and low pressure of gas as dampers on the construction-backward-linkage industry.

In the fiscal year 2021-22, the manufacturing sector had nearly 23-per cent share in the gross domestic product or GDP, and large-scale manufacturing segment accounted for nearly 11 per cent. Small, medium and micro had nearly 8.0-per cent contribution. The cottage industry had around 4.0-per cent share.

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