Driving export growth

The major causes of the multifaceted crises facing the country in the recent past have largely been the shortage of foreign currency and the continuous depletion of foreign exchange reserves. Recent upward trends in exports and remittances have helped ease the severity of these two pressures. While remittance inflows continue on an upward trajectory, export earnings are not showing similar momentum.

Export Promotion Bureau (EPB) data shows that export growth declined by nearly 14.25 percent in December 2025. In fact, export performance has been on a downward trend for five consecutive months in the current fiscal year. During the first six months of FY2025-26, Bangladesh exported goods worth $23.99 billion, compared to $24.53 billion in the same period of the previous fiscal year, marking a decline of 2.19 percent.

Many believe the current state of global trade, particularly the reciprocal tariffs imposed by the United States and the resulting erosion of the competitiveness of Bangladeshi products, has played a major role. Higher tariffs in the US market have pushed competing countries such as China and India to divert goods to European markets at relatively lower prices, causing Bangladesh to lose market share.

The domestic socioeconomic environment has also been unfavourable for business and investment over the past few years. The energy crisis, high inflation, elevated interest rates, the mass uprising, incidents of mob violence and other factors have slowed the pace of economic activity. Production has declined, while production costs have increased. Together, these pressures have discouraged new business ventures and fresh investment.

Adding to these challenges is the strain in relations with India. India remains a major trade partner of Bangladesh, not only for raw material imports and product exports, but also because Indian land ports have long played an important role in facilitating Bangladesh exports. The political transition following the mass uprising has affected bilateral diplomatic relations, creating new obstacles for cross-border trade.

A major structural weakness of the export sector is its excessive reliance on a single industry. Any slowdown in garment exports has a direct impact on overall export performance. According to EPB data, garment exports declined by 2.63 percent during this period. 

Analysts have long stressed the need to diversify export products, yet little meaningful action has followed.

Competitiveness is the most critical issue in export performance, and there is little evidence of effective countermeasures. While competing countries are offering substantial incentive packages to exporters to offset the impact of reciprocal tariffs, Bangladesh has withdrawn cash incentives and other support, citing various justifications. As a result, competitors have managed to reduce production costs and offer lower prices, while Bangladesh has struggled to do so.

Some experts expect the current uncertainty to ease once an elected government takes office. However, sustainable export growth requires long-term and coherent planning. Alongside policy support, the government must take steps to remove deeper structural barriers.

Export products and destinations need diversification. Both public and private initiatives are required to reduce excessive dependence on ready-made garments. Relying on a limited number of markets for export earnings is equally risky. Along with identifying non-traditional export products, greater emphasis is needed on exploring new destinations. Diversification can reduce the volatility affecting the garment sector due to higher US tariffs and help foster domestic industrial growth. Export diversification should be aligned with industrial, import and financial policies to strengthen overall competitiveness.

The writer is an economic analyst