Large industrial enterprises in Bangladesh see throughput resurgence--after recent pickups for political upheavals--as is reflected in the large-scale manufacturing sector's latest index upswing.
The index measuring state of the manufacturing biggies expanded 11.39 per cent in October of this fiscal year, according to Bangladesh Bureau of Statistics (BBS) data.
Out of 23 manufacturing subsectors, 18 recorded a growth compared to the same period a year before.
However, five in the domain-tobacco products, leather, paper, motor vehicles, and fabricated metals-saw a decline during this time.
The large-scale manufacturing sector contributes over 11 per cent to the country's GDP, and it serves as a key indicator whether the industrial units are in right direction or not.
During the first quarter of this fiscal year (July-September), the index grew by only 3.85 per cent.
The October rebound was driven by strong performances in several sectors--machinery and equipment: 37.35 per cent, printing: 31.5 per cent, computer and optical products: 24 per cent, clothing (which holds the largest weight in the index): nearly 20 per cent, electrical equipment: 17.92 per cent, coke and refined petroleum products: 11.28 per cent and chemicals: 11.52 per cent.
The large industrial sectors having single-digit growth were food products recording 8.0 per cent, beverages 9.4 per cent, wood and wood products 9.94 per cent, basic metals 6.52 per cent, furniture 5.65 per cent and pharmaceuticals 2.66 per cent.
The strong performance of large-scale manufacturing aligns with private-sector indicator called Purchasing Managers' Index (PMI) which stood at 55.7 in October, signaling economic expansion.
Industry experts say challenges stemming from political unrest leading to the downfall of the Awami League government dwarfed the growth in the first quarter.
Anwar Alam Chowdhury (Pervez), president of Bangladesh Chambers of Industry (BCI), also sees high lending rates as a key barrier to business expansion.
He urges authorities to lower interest and ease LC restrictions-interventional measures taken to combat wayward inflation-in order to support growth.
Syed Nazrul Islam, a former leader of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Managing Director of Well Dress, notes that clothing orders increased after Q1, although some orders shifted to India and Pakistan earlier in the year.
Economists believe that economic activity is gradually recovering, supported by a stabilized foreign-exchange market and rising domestic demand. Dr Zahid Hussain, former lead economist at the World Bank Dhaka office, acknowledges temporary setbacks from the student-led protests in mid-July but expresses optimism about the economy's recovery.
"Inflation is a barrier for expanding the large industrial sectors," he told the FE writer.
Dr M. Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh, attributes the growth in large-scale manufacturing to seasonal factors and a rebound in the RMG sector. "The RMG sector, which makes up over 60 per cent of the index, grew by nearly 20 per cent, driving overall growth in large-scale industries," he says.
He hopes for continued improvement in clothing manufacturing in the coming months.
The economist predicts climate change could boost beverage production in the near future-as was the case in the last summer.
However, economists warn that high inflation could erode demand for goods and services, potentially slowing down the broader economic recovery.
jasimharoon@yashoo.com