Bangladesh’s garment sector faces energy, demand crises

The world’s second-largest garment exporter is experiencing a slowdown that will threaten the nation’s economic recovery.

Bangladesh’s garment industry, the world’s No. 2 exporter after China, is facing a double whammy from slowing global demand and an energy crisis at home that’s threatening to thwart the nation’s pandemic recovery.

Plummy Fashions Ltd., a supplier to PVH Corp., the parent company of fashion brand Tommy Hilfiger, and Inditex SA’s Zara, saw new orders in July drop 20% from a year earlier, its Managing Director Fazlul Hoque said.

“Retailers in both European and US markets are either deferring the shipments of finished products or delaying orders, he said in an interview. “As inflation is soaring in our export destinations, it has a serious impact on us.”

Waning orders are a risk to the economy, where the garment industry makes up more than 10% of gross domestic product and employs 4.4 million people. It couldn’t be happening at a worse time for Bangladesh as authorities are resorting to productivity-killing power cuts to preserve fuel reserves amid a region-wide energy crisis, caused in part by the war in Ukraine.

“Uninterrupted energy supply is the key to delivering products in time,” Hoque said. “We’re facing a combination of multiple problems at home and abroad.