Large-scale manufacturing grows 3.85pc in Q1 FY25: BBS

JASIM UDDIN HAROON | Published: December 17, 2024 00:55:37

Bangladesh's large-scale manufacturing sectors expanded in the first quarter (Q1) of this fiscal year, with 15 out of 23 manufacturing sectors recording growth during the period.
The large-scale manufacturing index, which contributes over 11 per cent to the country's GDP, grew by 3.85 per cent during the July-September period compared to the same period a year earlier, according to data from the Bangladesh Bureau of Statistics (BBS).
Among the sectors driving growth, machinery and equipment, along with coke and refined petroleum products, grew by 37 per cent.
The motor vehicles sector expanded by 25 per cent, computers by 16 per cent, and leather products by 26 per cent. Tobacco manufacturing grew by nearly 28 per cent, chemicals by 13 per cent , basic metals by 20 per cent , and food products by 9.8 per cent.
The ready-made garments (RMG) sector, which holds the highest weight in the index, expanded by 4.2 per cent.
Conversely, some industries experienced contraction. The beverage industry declined by 12.3 per cent, rubber and plastic products fell by 3.74 per cent, and electrical equipment dropped by 6.6 per cent.
Despite the positive performance indicated by the large-scale manufacturing index, the data contrasts sharply with private sector surveys, such as the Purchasing Managers' Index (PMI). The PMI contracted during July, August, and September, remaining below the benchmark score of 50-a sign of contraction in economic activity.
Industry experts attribute some of the challenges faced during Q1 to disruptions caused by political unrest, which led to the downfall of the Awami League government.
Syed Nazrul Islam, former leader of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Managing Director of Well Dress, noted slower clothing orders during the review period.
"Many garment factories suffered damage due to mob violence during this period," he said, adding that a portion of orders shifted to other destinations during the unrest.
Despite the setbacks, Islam expressed optimism for the coming months. "We are expecting good orders for the next season," he said.
Economists believe that economic activity is gradually recovering, supported by a more stable foreign-exchange market and growing domestic demand.
Dr Zahid Hussain, a former lead economist at the World Bank, highlighted temporary setbacks caused by student-led protests in mid-July, but expressed optimism about the economy's recovery trajectory.
Dr M. Masrur Reaz, chairman and CEO of Policy Exchange of Bangladesh, attributed the growth in large-scale manufacturing to seasonal factors and a rebound in the RMG sector.
"The RMG sector, which accounts for over 60 per cent of the index, grew by more than 4.2 per cent, driving overall growth in large-scale industries," said Dr. Masrur.
He anticipates continued improvement in clothing manufacturing in the coming months.
Dr Masrur also pointed out that heavy rainfall dampened demand for beverage during the July-August period, contributing to the contraction in the beverage industry.
While the outlook for FY2025 appears positive, economists caution that high inflation could undermine demand for goods and services, potentially hindering broader economic recovery.
Despite these challenges, manufacturers remain optimistic about the coming months as political stability returns, and the sector builds on its recovery momentum.
jasimharoon@yahoo.com