Bangladesh’s factory output grew by 6.66 % in the current fiscal year, the slowest rate since the Covid-19 pandemic, due to high inflation affecting domestic demand and reduced exports. Import controls and increased energy costs further hindered industrial production, which was lower than the 8.37 percent growth of the previous year. The Bangladesh Bureau of Statistics (BBS) reported that this year’s industrial growth is the lowest since 1996-97, aside from the pandemic years.
Economists attribute the slowdown to a persistent US dollar crisis, rising energy bills, and higher consumer prices, leading to less than 6 % GDP growth for the second consecutive year. Despite the slower industrial growth, the services sector propelled the economy to a 5.82 % growth rate in FY24, below the pre-pandemic average of 6.6 percent.
The general index of industrial production for large-scale manufacturing grew by 4.41 % year-on-year in July-February FY24, compared to 7.79 % the previous year. Import reductions, particularly of raw materials and capital machinery, contributed to this deceleration. Imports fell by 15.42 % in the nine months to March, and capital machinery imports dropped by 19 %.
Experts like M A Razzaque from the Policy Research Institute (PRI) and former Bangladesh Knitwear Manufacturers and Exporters Association president Md Fazlul Hoque highlight the compounded challenges of inflation, import restrictions, and weakened local currency, leading to increased production costs and reduced consumer purchasing power. Consequently, export-oriented industries are struggling, with exports growing only 3.93 % in July-April FY24, down from 5.38 % the previous year.
The slowdown in industrial growth has also led to difficulties for small companies and a lack of job creation, with some firms facing potential closures. Hoque emphasizes the need for genuine political will to improve the business climate and boost job creation.
Comment here