Originally posted in The Daily Star on 4 November 2026
Garment unrest clouds fragile economic recovery
As prolonged unrest could hurt exports, economists urge dialogue with workers and reforms to revive investment
Wage protests by garment workers entered a fourth day yesterday, forcing several hundred factories to close, as fresh economic data pointed to a fragile and uneven recovery.
In the first four months of the fiscal year, exports grew by 6 percent and remittances by 13 percent.
The Bangladesh Bank has yet to publish the latest data on import payments. However, bankers said mounting payment pressure is pushing the taka lower against the dollar.
Imports rose by 12 percent in July-August. Meanwhile, private sector credit growth fell to the lowest level of 4.17 percent on record in September, a sign of continued weakness in investment and business activity. Inflation remains stubbornly high.
Economists said macroeconomic indicators present a mixed picture, with several underlying concerns yet to be addressed. They warned that prolonged unrest could disrupt production and exports, affecting the overall economy.
Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue, a local think tank, said the economy has yet to show a meaningful turnaround. Slow growth, weak investment and persistent inflation are still weighing on economic activity.
Exports, remittances and foreign exchange reserves have performed relatively well, he said, but the overall picture remains weak.
Mustafizur said export growth of around 6 percent fell short of the double-digit target, inflation stayed close to 8.5 percent and private sector credit growth remained below 5 percent.
Despite several policy initiatives by the government and the Bangladesh Bank, the recovery has not yet translated into higher investment, more jobs and stronger growth, he said.
He added that the ongoing unrest in the garment sector could weaken the economy further.
“Factory unrest is neither good for production nor for workers or exports. It could have a negative impact on the overall economy,” he said.
Mustafizur praised the government’s initiative to fix a minimum wage for garment workers, saying it is an important step towards ensuring that workers received the wages they are entitled to. However, he stressed that other legitimate grievances should also be addressed through dialogue.
Ashikur Rahman, principal economist at the Policy Research Institute of Bangladesh, said the most worrying indicator is private sector credit growth of just 4.17 percent in September.
With credit growing more slowly than inflation, it is contracting in real terms. This is consistent with both weak demand for investment loans and constraints on banks’ ability to lend. Reducing interest rates alone cannot resolve unreliable energy supplies, impaired bank balance sheets or uncertainty about doing business.
“Prolonged garment unrest adds to the risks by threatening production, delivery commitments and buyer confidence. Credible dialogue that addresses workers’ wage and cost-of-living concerns is essential to protecting livelihoods and export competitiveness,” he said.
Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID), said stabilisation measures and critical reforms are needed to revive economic growth while bringing inflation under control.
He stressed the need for reforms to strengthen Bangladesh’s overall competitiveness, particularly as the country has been granted an additional three years before graduating from the least developed country (LDC) category.
Khondaker Golam Moazzem, president of Knowledge Hub Institute, said the government should focus on four key areas: ensuring a steady improvement in foreign exchange reserves, gradually bringing down inflation, reducing non-performing loans in the banking sector and improving revenue collection.
He suggested setting specific monthly targets for each of these indicators and regularly monitoring progress to ensure accountability.
“If there is progress in these four areas, overall business confidence will gradually return, creating conditions for stronger investment, economic growth and employment generation in the coming days,” he said.
M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh, stressed the need to manage rising energy costs, ensure uninterrupted power and gas supplies to export-oriented industries, maintain export competitiveness and encourage remittances through formal channels.
He also warned that prolonged tensions in the Middle East could further increase import costs and threaten remittance inflows.
Md Deen Islam, professor of economics at Dhaka University, warned that failure to expand industrial capacity could create broader economic challenges beyond the garment sector.
“If we cannot establish industries and expand productive capacity in the country, similar problems could emerge in many other industries. This is a concern for the overall economy,” he said.
He also cautioned that weak investment, investors choosing other destinations and disruptions such as strikes and vandalism could reinforce one another, creating a vicious cycle that discourages fresh investment.
“The government needs to think seriously about how to break this cycle. Logistical problems and other barriers to investment must be addressed. Otherwise, what will happen to the future of the industrial sector, and how will new employment opportunities be created?” he said.
