Published: 07:47 AM, 24 July 2026
Dhaka Undergoes Downtrend in Foreign Trade With European Union
Bangladesh’s foreign trade with the European Union (EU), one of its most important economic partners, has experienced a noticeable decline in recent times, creating concerns among exporters, policymakers, and business leaders. Dhaka, the centre of the country’s commercial activities, has been witnessing challenges in maintaining the previous growth momentum of trade relations with European markets. The downturn has raised questions about export competitiveness, global market conditions, and the future direction of Bangladesh’s international trade.
The European Union has long been a major destination for Bangladeshi products, particularly ready-made garments (RMG), leather goods, footwear, agricultural products, and other manufactured items. For decades, the EU market has played a crucial role in Bangladesh’s economic growth by providing opportunities for exporters and supporting millions of jobs. However, recent global economic uncertainty, reduced consumer demand, rising production costs, and changing trade conditions have affected the flow of goods between Bangladesh and European countries.
The decline in foreign trade has become a matter of concern because exports to the European Union contribute significantly to Bangladesh’s foreign currency earnings. A reduction in export income can affect industrial growth, employment opportunities, and overall economic stability. Business communities in Dhaka have urged the government and relevant authorities to take immediate steps to address the challenges and restore the strength of trade relations with European partners.
One of the key reasons behind the decline is the slowdown in demand in several European economies. High inflation, increased energy prices, and economic uncertainty have influenced consumer behaviour in many EU countries. As people face higher living costs, spending on non-essential goods, including clothing and fashion products, has decreased. Since Bangladesh’s export sector is heavily dependent on the apparel industry, lower European demand has directly affected many manufacturers and exporters.
The ready-made garment sector remains the foundation of Bangladesh’s export economy. Millions of workers are employed in garment factories, and a large share of export earnings comes from this industry. Although Bangladeshi garments have earned international recognition for their quality and competitive pricing, exporters are now facing stronger competition from other countries. Nations such as Vietnam, India, and Cambodia are increasing their presence in global markets, forcing Bangladeshi producers to improve efficiency and product quality.
Another major challenge is the increase in production costs. Rising prices of raw materials, energy, transportation, and labour have placed pressure on exporters. Many businesses in Dhaka have found it difficult to maintain competitive prices while dealing with higher operational expenses. European buyers are becoming more focused on affordable products, sustainability standards, and faster delivery, making it necessary for Bangladeshi companies to upgrade their production systems.
Trade experts have also pointed out that Bangladesh’s dependence on a limited number of export products creates vulnerability. While garments dominate foreign trade, other sectors such as pharmaceuticals, information technology services, processed foods, and high-value manufacturing have significant potential. Expanding export diversity could reduce risks and help Bangladesh maintain stronger trade relations with global markets, including the European Union.
Changes in international trade policies have also influenced Bangladesh’s position in the European market. As Bangladesh continues its economic development journey, it will eventually face changes in some trade privileges currently available to developing countries. Businesses are concerned about maintaining competitiveness after such changes. To overcome this challenge, exporters need stronger preparation, improved productivity, and investment in innovation.
The issue of compliance and sustainability has become increasingly important in European markets. Consumers and companies in the EU are paying greater attention to environmental protection, workers’ rights, and ethical production practices. Bangladesh has made progress in improving workplace safety and sustainability in the garment sector, but continued investment is necessary. Businesses that fail to meet international standards may face difficulties in accessing European markets.
The decline in trade has also highlighted the need for stronger cooperation between Bangladesh and the European Union. Diplomatic and commercial discussions can help identify new opportunities and remove barriers to trade. Both sides can benefit from closer collaboration in areas such as technology transfer, green industries, skill development, and investment.
The government of Bangladesh has taken several measures to support exporters, including financial assistance, policy reforms, and efforts to improve infrastructure. However, business leaders believe that more coordinated action is needed. Simplifying export procedures, reducing transportation delays, improving port efficiency, and ensuring reliable energy supplies could help strengthen Bangladesh’s position in international trade.
Dhaka’s business community has called for greater support for small and medium-sized enterprises (SMEs), which often struggle to enter foreign markets. SMEs can contribute significantly to export growth if they receive proper financing, training, and market information. Encouraging smaller businesses to participate in international trade could create new opportunities and reduce dependence on a few large industries.
Despite current difficulties, experts believe that Bangladesh still has strong potential in the European market. The country has a large workforce, growing industrial capacity, and years of experience in global manufacturing. With proper planning and investment, Bangladesh can overcome temporary setbacks and continue expanding its trade relations with European countries.
The future of Dhaka’s foreign trade with the European Union will depend on how effectively Bangladesh responds to changing global conditions. Improving product quality, adopting advanced technology, increasing export diversity, and focusing on sustainability will be essential for long-term success. The challenges facing exporters today can become opportunities for transformation if appropriate measures are taken.
Foreign trade is a key driver of Bangladesh’s economic progress. A healthy relationship with the European Union is not only important for exporters but also for workers, businesses, and consumers across the country. Restoring growth in EU trade will require cooperation among the government, private sector, and international partners.
As Dhaka navigates the current downturn, the focus must remain on building a more competitive, innovative, and resilient export economy. By addressing existing challenges and preparing for future changes, Bangladesh can strengthen its position in the global marketplace and maintain the European Union as a valuable partner in its economic development.
Bangladesh’s ready-made garment (RMG) sector, the backbone of the country’s export economy, is facing a serious downturn as exports experience a sharp decline in international markets. The fall in garment shipments has created growing concerns among manufacturers, workers, and policymakers, as the sector plays a vital role in employment generation, foreign currency earnings, and overall economic growth.
For decades, the RMG industry has been one of Bangladesh’s greatest economic success stories. The sector has transformed the country into one of the world’s leading apparel exporters and provided jobs for millions of people, especially women. However, recent challenges have slowed the industry’s progress and created uncertainty about its future.
One of the main reasons behind the decline in RMG exports is the reduction in demand from major international markets. Countries in Europe and North America have faced economic difficulties, including inflation and lower consumer spending. As a result, many buyers have reduced their orders or delayed purchasing decisions. Since Bangladesh depends heavily on these markets, any slowdown directly affects local garment manufacturers.
Rising production costs have also placed additional pressure on the industry. Prices of raw materials, energy, transportation, and other operational expenses have increased significantly. Factory owners are struggling to maintain competitive prices while managing higher costs. Smaller factories, in particular, are facing difficulties in continuing their operations under these challenging conditions.
Another important factor is increasing global competition. Countries such as Vietnam, India, and other apparel-producing nations are expanding their presence in the international market. These competitors are investing in modern technology, product diversification, and efficient supply chains. To remain competitive, Bangladeshi garment manufacturers need to improve productivity, upgrade technology, and produce more high-value products.
Industry experts have also highlighted the importance of reducing dependence on basic garment items. Bangladesh’s RMG exports are still largely concentrated on common products such as shirts, trousers, and basic knitwear. Although these products have strong demand, international buyers are increasingly looking for advanced designs, specialized clothing, and sustainable production methods. Expanding into higher-value garment categories could help Bangladesh regain stronger market positions.
Labour and compliance issues have also influenced the industry’s global image. International buyers are becoming more concerned about workplace safety, environmental protection, and workers’ rights. Bangladesh has made significant improvements in factory safety and sustainability after past challenges, but continued efforts are necessary to maintain trust among global customers.
The decline in exports has raised concerns about employment in the garment sector. Millions of workers depend on RMG factories for their livelihoods, and any prolonged slowdown could affect their income and economic security. Industry leaders have urged all stakeholders to take effective measures to protect workers while supporting factories during difficult periods.
The government and business organizations have introduced several initiatives to support the sector. These include improving infrastructure, encouraging investment, providing policy support, and promoting export diversification. However, experts believe that long-term solutions require greater investment in innovation, skills development, and modern manufacturing systems.
Despite the current difficulties, Bangladesh’s garment sector still has strong potential. The country has a large skilled workforce, extensive experience in apparel production, and a strong reputation among international buyers. With proper strategies and timely reforms, the industry can overcome the present challenges and return to a path of growth.
The future of Bangladesh’s RMG sector depends on its ability to adapt to changing global market conditions. Improving product quality, embracing new technologies, ensuring sustainability, and exploring new markets will be essential for maintaining competitiveness.
The recent decline in exports is a warning sign, but it also presents an opportunity for transformation. By addressing weaknesses and focusing on innovation, Bangladesh can strengthen its garment industry and continue to play a major role in the global apparel market.
PR Biswas is a Senior Staff
Correspondent at The Asian Age.
