Bangladesh’s garment industry is facing mounting pressure in the European market, with declining exports, falling unit prices and rising production costs raising concerns that future orders could shift to competing countries.
Apparel imports by the European Union (EU) fell 3.83% year-on-year in January–August 2026, while imports from Bangladesh dropped 11.67%, according to Eurostat data.
The decline comes amid growing economic uncertainty across Europe, where concerns over the cost of living, energy prices and housing affordability have fuelled public protests in several countries. Industry leaders fear prolonged unrest and economic weakness could dampen consumer spending and reduce demand for clothing.
However, exporters caution that protests alone cannot explain the decline. Pressure from international buyers to lower prices, rising domestic production costs and intensifying competition from other garment-producing countries are also weighing on Bangladesh’s export performance.
French Buyer Suspends Order
Fazle Shamim Ehsan, chief executive of Fatullah Fashion Limited and executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said a French buyer had asked a Bangladesh-based garment manufacturer to suspend an order that had previously been agreed upon.
Ehsan expressed concern that prolonged instability in France could weaken the economy, reduce consumers’ purchasing power and further undermine demand for apparel.
The value of the suspended order and the extent to which the protests influenced the buyer’s decision were not disclosed. Industry representatives cautioned that a single case does not establish a broader trend across the European market.
M A Jabbar, managing director of DBL Group, said Bangladesh was already facing intense competition in Europe and that prolonged instability could further affect exports.
Asif Ashraf, managing director of Urmi Group, also expressed concern about the market outlook.
Shovon Islam, managing director of Sparrow Group, however, said the broader economic slowdown in Europe was likely to have a greater impact on garment orders than the protests themselves. He added that orders were also declining in the US market, although conditions in Europe appeared more difficult.
Export Earnings and Unit Prices Decline
EU apparel imports fell in value to €60.29 billion in January–August 2026, from €62.69 billion in the same period a year earlier.
Imports from Bangladesh declined to €11.93 billion from €13.50 billion, representing a reduction of approximately €1.58 billion.
The decline reflected both lower shipment volumes and falling unit prices. Bangladesh’s apparel shipments to the EU fell 4.58%, while the average price per kilogram dropped 7.43%, from €14.87 to €13.76.
The fall in average prices may reflect pressure from buyers as well as changes in the mix and quality of garments exported.
Meanwhile, competing suppliers recorded growth. EU apparel imports from China increased 2.38%, while imports from Vietnam rose 4.46% during the same period, according to Eurostat data.
Despite the weakness in the eight-month figures, Bangladesh’s exports showed signs of recovery in the new fiscal year. Export Promotion Bureau figures show that garment exports to the EU rose 3.33% year-on-year to $4.90 billion in July–September of fiscal year 2026–27.
Economic Slowdown Raises Demand Concerns
The European Commission’s economic forecast published in May 2026 projected EU economic growth to slow from 1.5% in 2025 to 1.1% in 2026, while inflation was forecast to reach 3.1%.
Slower growth and persistent inflation could constrain household purchasing power and affect spending decisions, potentially adding to uncertainty in the apparel market.
However, weaker economic growth does not necessarily translate into an equivalent decline in clothing imports. Consumer incomes, retailers’ inventories, garment prices and purchasing strategies also influence demand.
Yarn Import Restrictions Add to Costs
Bangladesh’s garment manufacturers are also concerned about rising production costs linked to government restrictions on yarn imports.
The government has withdrawn bonded warehouse facilities for imports of yarn in the 10–30 count range used in knitwear production, requiring importers to provide bank guarantees equivalent to the value of imported yarn.
The guarantees can be released after the garments are exported and the required documentation is submitted.
Exporters say the new arrangement complicates imports, increases financial pressure and encourages greater reliance on comparatively expensive domestic yarn.
Fakir Kamruzzaman Nahid, managing director of Fakir Fashions Limited, said imported 30-count combed yarn cost $3.15 per kilogram, compared with $3.75 for the same type of yarn in the domestic market.
He estimated that using locally sourced yarn could increase production costs by an average of 15 cents per garment, while many European buyers were unwilling to accept even a one-cent price increase.
Nahid said energy shortages, rising production expenses and differences in trade advantages enjoyed by competing countries were further challenging Bangladesh’s competitiveness.
Orders Could Shift to Rival Countries
Bangladesh faces growing competition from China, Vietnam, India, Cambodia and Pakistan as international buyers seek competitive prices and reliable supply chains.
Nahid warned that the coming month would be critical for the garment sector, saying some orders that might otherwise have gone to Bangladesh could shift to Vietnam, Cambodia, India or Pakistan if yarn import restrictions were not lifted.
The prospect of higher garment workers’ wages is another concern for manufacturers. While wage increases can improve workers’ incomes, factories may face additional financial pressure unless productivity improves and buyers agree to prices that reflect higher production costs.
Industry representatives say Bangladesh needs to preserve relationships with European buyers, control production expenses, diversify its products and improve quality to remain competitive.
Although unrest in Europe could add to the uncertainty, the available figures suggest that Bangladesh’s export difficulties extend beyond protests, encompassing weaker demand, declining unit prices, higher costs and intensifying competition in the global apparel market.
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