Bangladesh RMG Exports Face Extended Slump as Gulf War and Oil Shock Hit Buyer Demand

Dhaka, July 25, 2026 — Bangladesh's sluggish garment exports are unlikely to recover in the coming months as the Gulf war drives up energy costs, feeds inflation in key Western markets, and leaves retailers with more unsold stock, according to exporters and major international buyers. 📉

👕 Apparel makers say buyers remain cautious and are avoiding large orders, even though uncertainty over US tariffs has eased following the Trump administration's decision to keep the newly announced tariff unchanged at 10 percent on July 24.

📊 The Numbers — RMG Earnings Decline in FY26

The country's readymade garment (RMG) sector earned $38.70 billion in fiscal year 2025-26 (July-June), down 1.64 percent from $39.35 billion in FY25, according to Export Promotion Bureau (EPB) data. 💰

📋 Key factors behind the decline:

• 📅 Months of uncertainty over US tariffs throughout the fiscal year
• ⛽ Gulf war driving up energy costs globally
• 📈 Inflation weakening consumer demand in Western markets
• 📦 Retailers holding excess inventory from previous seasons
• 🏭 Rising production costs at home due to energy price increases

🌀 "Perfect Storm" for Exporters

Abrar H Sayem, Director of Sayem Group — which supplies clothing to brands including US Polo Assn, British Ben Sherman, and European fast-fashion retailer NewYorker — described the situation bluntly:

💬 "We are facing a perfect storm now."

🤝 The challenges are multifaceted:

• 🌍 Global volatility — Order placement remains slow as global uncertainty lingers
• ⛽ Oil price shock — Gulf war has triggered an energy crisis rippling through the global economy
• 📈 Western inflation — Higher energy prices have pushed up inflation in Bangladesh's main export markets
• 📦 Inventory buildup — Retailers have unsold stock from previous seasons, reducing new orders
• 🏭 Domestic energy costs — Rising energy prices have increased production costs for manufacturers

🏭 Industry Voices — Cautious Outlook

AK Azad, Managing Director of Ha-Meem Group, a leading garment exporter to the US, said:

💬 "The order placement is still slow as the global volatility is lingering. The war, oil prices and old inventories have been affecting buyers' decisions."

Tapan Chowdhury, Managing Director of Square Apparels, which exports to the US and Europe, added:

💬 "Western buyers are also going through a difficult period, which has affected their purchasing decisions. We have the challenges of continued energy supply, but still we are hopeful that the market will recover in the near future."

⚠️ Structural Vulnerability — Over-Reliance on Basic Items

Exporters also highlighted a structural issue: Bangladesh's heavy reliance on five basic garment items has left the industry vulnerable in an oversupplied market marked by intense competition. 📦

🎯 The five basic categories that dominate exports:

• 👕 T-shirts and jerseys
• 👖 Trousers and shorts
• 🧥 Sweaters and cardigans
• 👔 Shirts
• 🩳 Underwear and sleepwear

⚠️ When demand for these basic items falls, the entire export sector suffers because there's insufficient diversification into higher-value products.

🔮 Outlook — Recovery Not Imminent

Despite the US tariff clarity (10% rate confirmed July 24), exporters do not expect a quick rebound:

• 📅 Short-term (next 3-6 months) — Order flow likely to remain slow as buyers deplete existing inventory
• 📊 Medium-term (6-12 months) — Recovery depends on Gulf war resolution and Western inflation easing
• 🏭 Structural reforms needed — Diversification into higher-value products, improved energy supply, cost competitiveness

For Bangladesh's RMG sector — which accounts for over 80% of merchandise exports — the extended slump poses significant challenges for the millions of workers employed in the industry and the broader economy that depends on garment export earnings. 🇧🇩