Leaders of Bangladesh’s apparel sector have warned that the industry is likely to face sustained challenges in 2026, citing weak consumer demand driven by sluggish economic growth and persistent inflationary pressures in key markets such as the United States and the European Union.
Industry representatives, however, expressed cautious optimism that upcoming national elections and a stable post-election environment could help resolve several domestic issues affecting business operations. They expect an elected government to focus on improving law and order, addressing banking sector constraints and prioritising private sector concerns that have weighed on investor and buyer confidence.
Sector insiders described 2025 as a difficult year for the apparel industry due to a combination of global and domestic factors. These included the imposition of reciprocal tariffs by the United States, intensified international competition, geopolitical and trade uncertainties, rising production costs at home and unreliable energy supplies.
Md Fazlul Hoque, a former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said that an elected government was expected to bring significant improvements in law and order, resolve banking sector issues and refocus attention on the private sector, which he said had been neglected in the previous year. These measures, he added, were likely to help restore buyer confidence and lead to an increase in work orders.
Hoque further warned that the negative export growth recorded in recent months could persist, largely due to subdued global demand following higher US tariffs. He observed that the tariffs had dampened garment demand and constrained consumer spending in the United States as prices rose. At the same time, he said the shift of sourcing away from China had benefited Bangladesh, enabling it to remain competitive in the global market.
Inamul Haq Khan, vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the industry had expected to benefit from relatively higher US tariffs on China and India, but had fallen short of anticipated gains. He attributed this to several factors, including intensified competition in the European market.
He noted that exporters from China and India, affected by higher US tariffs, were increasingly focusing on the EU, where Bangladesh traditionally held a competitive position. He added that competition in the EU was expected to intensify further in the coming year. Khan also pointed out that policy support measures and incentives provided by the Indian government enabled exporters there to offer very low prices to international buyers, creating a disadvantage for Bangladeshi manufacturers.
Khan stressed the need to improve productivity and efficiency to maintain competitiveness, noting that buyers were unwilling to accept higher prices amid falling demand. He also highlighted the importance of addressing domestic challenges such as high bank interest rates, energy supply disruptions and cumbersome customs procedures to reduce production costs.
Exporters identified Bangladesh’s upcoming graduation from least developed country (LDC) status, scheduled for November this year, as another major challenge for 2026. While duty benefits are set to continue until 2029, industry leaders warned of a significant impact on exports once the transition period ends.
They noted that Bangladeshi garments exported to the EU, the country’s largest market, would lose duty-free access after graduation and would not qualify for duty-free treatment under the EU’s Generalised System of Preferences Plus scheme due to safeguard measures.
Salim Rahman, a vice-president of the BGMEA, said the industry was not opposed to LDC graduation but had called for an extension of the transition period to allow more time for preparation. However, exporters remain divided on the issue, with some arguing that an extension would be ineffective without concrete steps to improve infrastructure, reduce lead times and ease the cost of doing business.
