Country's large-scale manufacturing sector recorded a double-digit growth of 10.37 per cent in December last year, rising from the same period in 2023, according to data released last week by the Bangladesh Bureau of Statistics (BBS).
Large-scale manufacturing contributes over 11 per cent to the country's GDP and serves as a key indicator of industrial performance.
The quantum index of large manufacturing industries reached 246.58 points in December 2024, up from 223.42 in December 2023.
Of the 23 manufacturing subsectors, 14 posted growth, while seven saw declines.
Sectors that contracted during the months included tobacco products, textiles, leather, chemicals, paper, computer-related industries, and "other manufacturing" sectors.
However, the large industries registered sluggish growth earlier in the current fiscal year (FY 2024-25), with the index rising by only 3.85 per cent in July-September quarter (Q1).
The December rebound was, however, largely driven by the ready-made garments (RMG) sector that holds the largest weight in the index at 61 out of 100. Any fluctuation in RMG significantly impacts the overall manufacturing index.
Other key industries that expanded in December last included: beverages 21 per cent, food 10.11 per cent, wood and related industries 15 per cent, printing 19 per cent, electrical equipment 16 per cent, rubber 14 per cent, fabricated metals 12.73 per cent, machinery and equipment 28.88 per cent, pharmaceuticals and furniture 4.0 per cent each during the period under review.
The strong performance in manufacturing aligns with the Purchasing Managers' Index (PMI), which stood at 61.7 in December, indicating economic expansion.
Industry experts say political unrest-leading to the fall of the Awami League government-weighed on growth in the Q1 of this FY.
Mr. Anwar-ul Alam Chowdhury (Parvez), president of the Bangladesh Chamber of Industries (BCI), identified high lending rates as a major barrier to business expansion further.
The lending rate is a barrier to further expansion of business which was also associated with poor buying orders, he said.
Mr. Syed Nazrul Islam, a former leader of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and managing director of Well Dress, said that clothing orders increased after the Q1, although some orders had previously shifted to India and Pakistan.
Economists believe that the economic activity is gradually recovering, driven by a stabilised foreign exchange market and rising domestic demand.
Dr. Zahid Hussain, former lead economist at the World Bank's Dhaka office, said that the student-led uprising in mid-July caused temporary setbacks, He, however, expressed optimism about economic recovery.
"Inflation remains a challenge for industrial expansion but it is gradually easing," he said, adding that the improvement is also reflected in the country's export earnings.
The export earnings were up by 10.41 per cent to US$32.93 billion in July-February period of this FY.
Dr. M. Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh, attributed the growth in the manufacturing sector to seasonal factors and a strong rebound in RMG.
He said that with the RMG sector making up over 60 per cent of the index and growing over 16 per cent in December, it has been the key driver of overall industrial growth.
He expected continued improvements in the clothing sector in the coming months.
The economist also predicted that climate change could boost beverage production in the coming months as seen during last summer.
However, economists have warned that the high rate of inflation could dampen demand for goods and services, potentially slowing down broader economic recovery.
jasimharoon@yahoo.com
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