Written by The Banking Post
Bangladesh’s large-scale manufacturing sector slipped into contraction in June 2025, shrinking 3.58 percent year-on-year after recording solid growth in May, according to the latest data released by the Bangladesh Bureau of Statistics (BBS).
This marks the second contraction in FY2024-25, the previous one being in August 2024, when political unrest against former Prime Minister Sheikh Hasina disrupted economic activity. The unrest eventually forced her resignation and departure from the country.
The clothing and textile sectors, which together account for more than 72 percent of the Large-Scale Manufacturing Index (LSMI), were the main drivers of the downturn. Output in the ready-made garment (RMG) sector fell sharply by 6.55 percent in June, while the textile sector posted marginal growth of less than 1 percent.
Despite the overall decline, the data showed resilience in several manufacturing divisions. Of the 23 sub-sectors, only seven recorded contraction, while 16 expanded.
Key laggards included:
- Tobacco: down more than 20 percent
- Coke and refined petroleum: down 34 percent
- Pharmaceuticals: down 6.78 percent
In contrast, strong performers included:
- Other transport equipment: up 33.61 percent
- Motor vehicles, trailers, and semi-trailers: up over 21 percent
- Paper and paper products: up 7.56 percent
Economists attributed the contraction partly to global trade volatility, including tariff actions taken by US President Donald Trump, which affected Bangladesh’s export-dependent industries.
“Trump’s tariffs made economic activities volatile,” said Dr. M. Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh. However, he noted that Bangladesh’s outlook remains relatively positive. “The forex market is stable, import demand is rising, and domestic consumption is on the upswing,” he added.
Analysts suggested that easing inflationary pressures and improving the investment climate will be critical for sustaining momentum in the manufacturing sector, which contributes more than 11 percent to GDP and employs over 5 million workers.
