Large-scale manufacturing in Bangladesh contracted by 9.75% year-over-year (YoY) in June, according to the latest data available with the Bangladesh Bureau of Statistics.
This decline marks the first negative growth in months following a positive growth rate of 9.56% in May last.
This is significant enough to have implications on GDP (gross domestic product).
The quantum index for large-scale manufacturing (LSM) was 209.69 points in June compared to 194.52 points in the corresponding month last year.
Fourteen out of 24 sectors reported negative growth in June 2024.
Contracted sectors included beverage, textile, ready-made garment (RMG), paper and printing, chemical, tobacco, leather and related goods, rubber, non-metallic mineral products, fabricated metal products (excluding machinery and equipment), electronic and optical products, electrical equipment, motor vehicles and furniture.
Specifically, the beverage sector contracted by 28%, textiles by over 23%, clothing by 8.55%, leather by 5.83%, paper and printing by 12.63%, rubber by 28.27%, non-metallic mineral products by 18.57% and motor vehicles by 15%.
In contrast, sectors like carbonated drinks and petroleum grew by 31%, pharmaceuticals by 5.7%, basic metals by 3.32%, and computers by 15.74%.
Economists attribute this decline in large-scale manufacturing to lower productivity due to import restrictions addressing falling foreign exchange reserves.
Many manufacturers have also been reluctant to expand their operations amid rising inflation.
The manufacturing sector heavily relies on imported raw materials and capital machinery, making it vulnerable to import restrictions.
Former governor Abdur Rouf Talukder, who resigned shortly after the Awami League government fell on August 05, raised the LC market by 100% as part of import restrictions soon after taking office in June 2022.
The BBS compiles data from a sample of 23 large manufacturing units.
