Leaders of Bangladesh’s apparel sector are entering 2026 with caution, warning that weak consumer demand in key markets, persistent inflation and intensifying global competition will continue to weigh on export performance. Sluggish economic growth in the United States and the European Union, coupled with higher US tariffs, has already dampened orders and is expected to keep pressure on prices and volumes in the months ahead.
Industry insiders describe 2025 as a difficult year, hurt by both external and domestic factors. These included reciprocal US tariffs, aggressive competition from China and India, geopolitical uncertainties, rising local production costs, energy shortages and weaknesses in law and order and the banking sector. Export growth has remained negative for several months, and many buyers have stayed cautious, with some orders reportedly left unexecuted due to confidence concerns.
Despite the challenges, exporters see hope in the upcoming national elections, expecting that a stable post-election environment and an elected government could help restore buyer confidence. Industry leaders believe a new government may prioritize private sector concerns, improve law and order, resolve banking sector stress, ensure smoother energy supply and create a more business-friendly environment, all of which could help revive orders.
At the same time, competition is expected to intensify further in the EU market. With higher US tariffs, China and India are increasingly shifting focus to Europe, offering aggressive pricing backed by strong policy incentives at home. Apparel leaders warn that Bangladesh is facing a growing technical and productivity disadvantage, as buyers are unwilling to raise prices amid weak demand. They stress the need to boost efficiency, reduce lead time and lower production costs through reforms in banking, customs procedures and infrastructure.
Looking ahead, exporters also see least developed country (LDC) graduation as one of the biggest structural challenges in 2026 and beyond. Although duty benefits will continue until 2029, industry leaders fear a sharp loss of competitiveness after the transition period, particularly in the EU, Bangladesh’s largest apparel market. Studies suggest that post-graduation tariffs could reach up to 12 % under EU safeguard measures, forcing Bangladeshi exporters to absorb a significant share of the cost to retain orders, while competitors like Vietnam may continue to enjoy duty-free access.
While there are differing views on whether Bangladesh should seek an extension of the LDC graduation timeline, exporters broadly agree that without urgent preparation—through productivity gains, infrastructure upgrades and ease of doing business reforms—delaying graduation alone will not shield the industry. As 2026 approaches, the sector faces a critical test of resilience, policy support and its ability to adapt to a rapidly shifting global trade landscape.
