Bangladesh's large-scale manufacturing sector sees some rebound with its return onto growth trajectory in January after a tumble last December, signifying tentative recovery in the industrial sector.
The index that measures the industrial output rose nearly 1.0 per cent year on year in January, in a reversal of 6.34-percent decline recorded in December, according to data released Thursday by Bangladesh Bureau of Statistics (BBS).
Such biggies in industrial sector account for around 11 per cent of the country's gross domestic product (GDP).
However, the clothing industry -- which carries the largest weight in the manufacturing index, about 61 per cent -- remained in negative territory for its full links with overseas markets.
It contracted 3.4 per cent during the period under review. A decline in this segment tends to exert a disproportionate drag on the overall index.
Textiles sector, the second-largest component with a weight of more than 11 per cent out of 100, expanded over 5.2 per cent that helped expand the overall index.
Other sectors that recorded growth included beverages, tobacco, paper and printing, and pharmaceuticals.
In contrast, food products, clothing, electrical equipment and motor vehicles registered contraction.
"We have been facing weak order flows for quite some time," says Anwar Ul Alam Chowdhury Parvez, a former president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and managing director of Evince Group.
He further says rising global shipping costs are placing additional pressure on manufacturers.
"The international buyers were increasingly pushing suppliers to absorb higher logistics expenses by lowering prices," he told the FE, adding that the situation still remained volatile following war in the Middle East.
Economists say both domestic and external risks remain elevated particularly amid the ongoing Mideast crisis, worsening inflationary pressure and fuel shortages.
Dr Zahid Hussain, an independent economist, notes the deteriorating global outlook is weighing on the country's manufacturing and all real sectors, including agriculture.
"The fuel crisis is a major problem at the moment and it will have a broad impact across industries," he says.
He mentions that that elevated inflation posed another key risk, arguing that global institutions such as the World Bank and the Asian Development Bank have revised down Bangladesh's growth outlook in the wake of geopolitical tensions in the Middle East.
jasimharoon@yahoo.com