The ready-made garment (RMG) sector – the pillar of Bangladesh’s economy accounting for over 80% of the country’s exports – faces unprecedented challenges. Rising production costs, global trade uncertainty, and the approaching departure from the Least Developed Country (LDC) group are forcing the industry into fundamental transformation.
Bangladesh remains the world’s second-largest apparel exporter after China. The RMG sector employs approximately 4 million people, the majority of whom are women. The country is a global leader in LEED-certified green garment factories, which represents a growing competitive advantage. However, by late 2025, garment exports began contracting, recording a 5% year-on-year decline.
A key challenge is Bangladesh’s planned graduation from LDC status in November 2026, which could mean the loss of preferential tariff conditions in the EU. Furthermore, a 56% minimum wage hike from late 2023 and a 33% increase in industrial gas prices in 2025 have drastically reduced producer margins. The industry faces the necessity of transitioning from a model based on cheap labour to higher value-added production.
Source: Economics Observatory / Textile Focus: https://www.economicsobservatory.com/whats-happening-in-bangladeshs-garment-industry