Bangladesh’s industrial sector has plunged into a deep crisis due to acute energy shortages, soaring bank interest rates, and a sluggish domestic market. Production costs have surged while technological stagnation has eroded global competitiveness. Many factories are operating below half capacity, and new investments have stalled. Experts warn that shrinking employment and industrial stagnation could push the overall economy toward a prolonged downturn.

Sectoral data show steep declines in textile, jute, cement, and food processing output, while high borrowing costs have discouraged new investment despite rising bank liquidity. The steel and cement industries are struggling with higher electricity prices and reduced demand, while the ready-made garment sector—responsible for over 80% of export earnings—has seen production drop by up to 30% due to power and gas shortages. Leather exports remain weak amid environmental compliance failures and financing constraints.

Export earnings fell 7.07% year-on-year in May 2026, with major markets shifting orders to competitors such as Vietnam and India. Industry leaders urge urgent policy action to stabilize energy supply, reduce interest rates, and restore investor confidence to avert long-term economic damage.