IN TODAY鈥橲 interconnected trade system, the smallest tremor in distant economies can send out disruptive waves through developing nations such as Bangladesh. As the country navigates the turbulent aftermath of the Covid pandemic, the combined impact of geopolitical tension, fractured supply chains and persistent inflationary pressures continues to challenge its economic footing. Yet, amid these headwinds lie opportunities if the response is bold, adaptive and strategically grounded.
The pandemic triggered a cascade of disruptions: lockdown curtailed manufacturing, shipping delays became commonplace and consumer demand shifted unpredictably. As tentative stability began to return, the Russia鈥揢kraine war unsettled the global order once again. Fuel prices soared and food supply chains splintered.
A subtler but equally consequential shift has been the retreat from globalisation. Nations, wary of over-dependence on foreign suppliers, have sought to re-shore production and bolster domestic self-sufficiency. Rising trade protectionism, manifest in tariffs, export restrictions and complex regulatory hurdles, has made it harder for developing countries to retain privileged access to key markets.
Export-dependent economies such as Bangladesh, whose fortunes are closely tied to the apparel sector, stand at a pivotal juncture in this evolving landscape.
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State of export economy
FOR more than two decades, the apparel industry has driven Bangladesh鈥檚 growth, generating more than 80 per cent of export earning and employing more than four million workers, mostly women. Low labour costs, preferential trade arrangements such as the EU鈥檚 generalised scheme of preferences and strong global demand once underpinned rapid expansion. Today, however, the advantages are eroding.
In the 2023鈥�24 financial year, exports fell well short of the target, hit by weakening demand in the European Union and the United States. Western consumers, under inflationary strain, have curbed discretionary spending, with apparel among the first to be sacrificed. Meanwhile, domestic production costs have risen sharply, fuelled by energy shortage, an unstable currency and inflation at home.
Adding to the challenge is the looming graduation from least developed country status in 2026. While an achievement worth celebrating, it will gradually remove the preferential trade terms that have supported Bangladesh鈥檚 competitive edge. Exporters will have to compete on equal terms on markets where price and quality margins are already tight.
Global headwinds may be beyond Bangladesh鈥檚 control, but domestic structural flaws deepen vulnerability. Chief among them is over-reliance on a single export sector. Despite years of policy rhetoric on diversification, industries such as leather, jute and pharmaceuticals have yet to achieve a meaningful scale. Limited research and development, restricted access to finance and inconsistent policy backing have kept them in the shadow of garments.
Energy insecurity remains another critical obstacle. Frequent outage and high power costs disrupt industrial output and add to expenses. Bureaucratic delays, shifting regulations and logistical bottlenecks further deter foreign investments.
The banking sector, beset by non-performing loans and weak governance, continues to sap growth potential. Small and medium-sized enterprises, the backbone of domestic commerce and a potential source of export diversification, remain largely excluded from formal credit systems.
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Path forward
BANGLADESH鈥橲 economic resilience has historically rested on an ability to adapt under pressure. That adaptability must now take the form of a forward-looking recovery strategy in tune with the realities of global trade.
First, serious commitment to export diversification is essential. Sectors where Bangladesh enjoys comparative advantage 鈥� agro-processing, information and communications technology, light engineering and pharmaceuticals 鈥� should receive targeted, performance-based incentives.
Second, a stronger regional trade integration can mitigate reliance on western markets. Revitalising SAARC, BIMSTEC and ASEAN partnerships and resolving trade frictions with neighbours such as India and Nepal would open up new channels for goods and services.
Third, improving the ease of doing business is critical. Streamlined tax structures, digitised public services and swift port clearances would reduce costs and raise competitiveness. Recent infrastructure achievements such as the Padma bridge and Dhaka metro rail should be matched with governance reforms that remove bureaucratic and procedural inefficiencies.
Fourth, human capital development must take priority. As automation threatens low-skilled garment jobs and sustainability becomes a global purchasing standard, the work force must be equipped with technical and vocational skills suited to emerging industries, from renewable energy to IT services.
Fifth, urgent banking reforms are overdue. Enforcing discipline in the sector, widening SME access to credit and developing capital markets could unlock domestic investment potential. Innovative financing models, including blended finance and impact investment, could help mobilise private capital for national development goals.
Bangladesh鈥檚 export competitiveness will depend heavily on its alignment with the global shift towards sustainable trade. Ethical production, supply chain transparency, and adherence to environmental, social, and governance standards are fast becoming prerequisites for market access.
The country already leads globally in green garment manufacturing, with the highest number of LEED-certified apparel factories. This success must be extended to other industries. A comprehensive green industrial policy, anchored in incentives, skills training and public鈥損rivate collaboration, could position Bangladesh as a modern, responsible exporter. Climate finance from donors and carbon markets could also fund adaptation, clean energy projects and sustainable agriculture initiatives.
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Policy coherence
RECOVERY will ultimately hinge on leadership capable of crafting and executing a coherent, long-term economic vision. This must balance growth with equity and be rooted in a realistic reading of shifting global trade dynamics. Public鈥損rivate collaboration should be institutionalised, fostering data-sharing, dialogue and joint problem-solving. Policy-making must evolve from reactive measures to structural reform, grounded in transparency and accountability.
Bangladesh has already shown that it can lift millions from poverty, build a competitive industrial base, and deliver large-scale infrastructure against formidable odds. The next phase demands a recalibration of its economic framework that accounts for global fragmentation while striving for a more diversified, resilient, and sustainable growth path.
The road ahead will not be straightforward. The international trading system is entering an era defined by volatility and rapid change. Recovery cannot mean a return to pre-pandemic patterns. It must mean building a new economic order fit for the challenges ahead.
With decisive reforms, visionary leadership and an unyielding focus on competitiveness and inclusion, Bangladesh can not only withstand global turbulence but emerge stronger and more self-reliant. The complexities of world trade are formidable, but Bangladesh鈥檚 capacity for reinvention is equally formidable.
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Shahidul Alam Swapan is a Geneva-based private banking financial crime compliance expert, columnist and poet.