Staff Correspondent:

The export earnings and remittance inflows had provided some relief for Bangladesh despite the overall slowdown in economic activity. But four months into the current fiscal year, the momentum in exports has faded. Export earnings have declined for the third consecutive month with a sharp 7.43 percent drop in October.

The country exported goods worth $3.82 billion in October of FY 2025–26, down from $4.13 billion in the same month of FY 2024–25, according to updated data released on November 3 by the Export Promotion Bureau (EPB). The exports declined by 7.43 percent year-on-year. Exports declined for two consecutive months previously: 4.61 percent in September and 2.93 percent in August.

Exports in July 2025 were up 24.9 percent compared to the same month last year. The stellar performance of that one month boosted the fiscal year’s figure. However, it has since drastically decelerated to just 2.22 percent after four months (July to October).

Industry insiders report that nationwide demonstrations by students and the general public, blockades, clashes, and curfews occurred during the anti-Hasina movement in July 2024, paralyzing economic activities. Still, exports in that tumultuous month reached $3.82 billion. The political situation, however, remained largely calm in the next three months: August, September, and October. Despite this, the country’s exports in 2025 declined from the same period of 2024, which analysts find worrisome.

Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told journalists, “Our export sector came under pressure in July and August due to the additional tariffs imposed by Donald Trump. Some of that impact carried into September. But the sharp drop in October’s exports is certainly alarming. Our policymakers need to take this seriously.”

Khan, also the managing director of Rising Fashions Ltd., said, “Since after August 5 last year, many export-oriented factories have shut down. Many entrepreneurs are unable to import raw materials as they’ve become loan defaulters. Bank interest rates have almost doubled. Running a business has become very tough under such circumstances.”

According to the statistics available from the EPB, Bangladesh exported goods worth $16.13 billion to the global markets during July-October of FY 2025-26. In the same four-month period of the previous FY 2024-25, exports amounted to $15.78 billion. This means exports grew by 2.22 percent in the current fiscal year.

A review of EPB data suggests that this marks the second-lowest growth in exports over the past five fiscal years. The steady decline over the past three months has largely contributed to the slowdown in growth.

In August 2024, exports stood at $4.03 billion. And in August 2025, it stood at $3.91 billion, marking a decline of 2.93 percent in August. Exports in September 2024 were $3.80 billion, which this year declined to $3.62 billion, down by 4.61 percent. In October, export earnings fell further, down 7.43 percent year on year — exhibiting a fall from $4.13 billion in October 2024 to $3.82 billion this year.

Apparel exports, accounting for more than 80 percent of the country’s total exports, still dictate the export growth scenario. According to leaders in this sector, the lower growth was due to a slowdown in the apparel sector. The EPB data supports this as it showed an 8.39 percent decline in apparel exports in October compared to the same month last year.

Mohammad Hatem, president of BKMEA, said, “The country’s industry and economy are now in the ICU. Some 80 percent of factories are running at a loss. And buyers are not placing new orders. Yet, the government is going ahead with LDC graduation. We have been telling the government from the very beginning to delay the LDC graduation. Once Bangladesh graduates from LDC status, the export sector will suffer even more.”

The export performance of the country’s ready-made garment sector is closely linked to the opening of back-to-back LCs. Opening of such LCs decreased by 10.63 percent during the first quarter of FY 2025–26, according to the central bank’s data. Similarly, LC settlements for capital machinery, intermediate goods, and raw materials also declined.

In the first quarter of the current fiscal year, LC settlements for capital machinery declined by 11 percent. In the previous fiscal year (2024–25), imports of major industrial equipment dropped even more drastically by 25.42 percent. In July–September 2025, LC settlements for intermediate goods and raw materials declined by 17.62 percent and 1.04 percent, respectively.

Private-sector credit growth has now reached its lowest level in more than two decades, standing at just 6.29 percent as of September 2025. A review of the latest central bank data has also shown that private sector bank credit growth hit the lowest level on record this year in June. In July and August, instead of growing, the private sector credit actually turned negative. Total outstanding private sector loans stood at BDT 17.47 trillion at the end of June 2025, dipping slightly in August with a decline of around BDT 5.93 billion. In other words, the growth of credit turned negative during the first two months of the fiscal year before posting a slight uptick in September.

Officials from the country’s top banks say that most banks are not issuing new loans. The year-on-year growth seen in the official data also largely comes from the accumulation of unpaid interest and rising interest rates. Such a severe contraction of private sector capital demand has never been experienced. Yet, the private sector remains the primary driver of Bangladesh’s economic growth and employment, accounting for most of the country’s production, trade, and services. Unless private investment and credit flow improve, the economy is unlikely to recoup the lost momentum.

Syed Mahbubur Rahman, managing director of Mutual Trust Bank, told journalists “Most bank loans originate from import LCs, but imports have remained weak for the past two years. The situation for capital machinery imports is particularly bad. Banks are not issuing new loans in any significant volume. Instead, they consider investment in government bills and bonds to be safer and more profitable. That’s why private-sector credit has turned negative.”

He added, “For nearly a decade and a half, private-sector credit growth was unusually high, often driven by fraudulent borrowing. Several private banks that lent excessively have now become crippled. Five are in the process of merging. These banks can’t even lend a single taka now. In this situation, stagnant credit growth is only natural.”