Europe Protests Cast Shadow Over Bangladesh Garment Orders, Exporters Call Next Month Critical

Protests spreading across European countries such as France, Italy, Portugal, Belgium and Spain over issues including the cost of living, fuel prices and a housing crisis have created a strong fear that orders for Bangladesh's ready-made garments will fall. The unrest in Bangladesh's largest export market has directly worried exporters.

The European Union is Bangladesh's biggest export market, where about 50 percent of the country's total garments are exported. Exporters say prolonged unrest could deal a major blow to garment demand alongside a fall in consumers' purchasing power.

Already, French buyers have asked some factories such as Fatulla Fashion Limited to temporarily suspend orders that had initially been finalised. Top officials of DBL Group and Urmi Group have also expressed fears that if such political and economic unrest is prolonged in a market facing intense competition, it will have a major negative impact on the country's overall export earnings.

However, according to a section of entrepreneurs, not only the protests but Europe's overall economic slowdown is the main reason for falling orders. According to European Commission forecasts, EU economic growth in 2026 could fall to 1.1 percent, down from 1.5 percent the previous year.

Data from the EU statistics agency Eurostat say overall EU garment imports in the eight months from January to August this year fell 1.29 percent compared with the previous year. During this period, Bangladesh's exports there fell 12.67 percent.

However, according to Export Promotion Bureau data, although Bangladesh began to regain some of its lost market share in August and September, the European slowdown is complicating the situation. In other words, even though there are signs of a recent recovery, it remains fragile, and new unrest could halt that recovery, it is feared.

Amid this European market slowdown, domestic restrictions on yarn imports and a possible wage increase have created additional cost pressure on exporters. To protect domestic textile mills, the bonded warehouse facility for importing 10 to 30 count yarn has been cancelled and an obligation to deposit a bank guarantee of equal value imposed, which exporters see as a major non-tariff barrier.

According to Fakir Fashions, imported 30-count combed yarn costs 3.15 dollars per kilogram, while the same yarn costs 3.75 dollars in the local market. As a result, being forced to use local yarn raises production cost by an average of 0.15 dollars per piece of garment, while European buyers, instead of accepting a higher price, are pressing to lower prices.

Meanwhile, with a decision on workers' new wage structure still awaited, costs face further increases. In other words, buyer pressure to cut prices on one side and the prospect of higher yarn and wage costs at home on the other — exporters' margins are being squeezed from both directions.

In this reality, it is becoming difficult for Bangladesh to retain its competitiveness in the international market. In particular, with free trade agreements with the European Union and in the race for duty-free benefits, competitor countries such as India and Vietnam are moving ahead. According to sector insiders, Bangladesh is already falling behind due to a local energy crisis and additional domestic production costs.

Businesspeople have warned that the next month is extremely critical for the country's garment sector. If the restrictions imposed on yarn imports are not lifted within this time, many important orders that could have come to Bangladesh may go to competitor countries such as Vietnam, Cambodia, India and Pakistan.

Overall, the combined effect of Europe's protests, its economic slowdown and domestic cost pressures has now become a major question for Bangladesh's garment exports. Buyer decisions in the next month and policy steps on yarn import restrictions will determine whether this fear remains temporary or turns into large-scale loss of orders.