Bangladesh Garments Industry Faces Headwinds as Apparel Exports to 15 EU Nations Decline

The European Union’s market for Bangladeshi readymade garments (RMG) is painting an increasingly concerning picture, as export revenues across 15 of the 27 member states suffered a noticeable contraction during the newly concluded 2025–26 financial year.

According to data compiled by the Export Promotion Bureau (EPB) and subsequently analysed by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) alongside the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), overall apparel shipments to the EU dipped by 3.31 per cent. Total garment exports to the trading bloc stood at $19.06 billion, down from $19.71 billion recorded in the preceding fiscal year. As a direct consequence, the EU’s contribution to Bangladesh’s aggregate global garment export earnings shrank from 50.10 per cent to 49.25 per cent.

Key Market Contractions

The downturn has primarily hit Bangladesh’s major export destinations within Western and Central Europe, while growth was largely confined to smaller, emerging markets.

• Germany: As Bangladesh’s premier European destination and second-largest global market after the United States, Germany saw exports plummet by 11.5 per cent, dropping from $4.95 billion to $4.38 billion. Knitwear exports took the hardest hit, falling by roughly 13 per cent to $2.68 billion, whilst woven garments declined by nearly 10 per cent to $1.70 billion.

• France: Ranked as the third-largest European market, shipments to France fell by almost 9 per cent, dropping from $2.16 billion to $1.97 billion. Knitwear fell by 11 per cent, whereas woven products saw a 5 per cent reduction.

• Italy: In the fourth-largest destination, exports slipped by approximately 8 per cent, contracting from $1.54 billion to $1.42 billion, with knitwear again bearing the brunt of the drop.

• Other Affected States: Notable double-digit declines occurred in Denmark (down 10 per cent to $940 million) and Ireland (down over 10 per cent to $230 million). Romania recorded the sharpest overall decline of 20 per cent, plunging from $230 million to $180 million. Downward trends were also observed in Belgium, the Czech Republic, Portugal, Slovakia, Greece, Croatia, Finland, Luxembourg, and Malta.

Pockets of Resilience

Despite the widespread downturn, Spain—Bangladesh’s second-largest EU market—demonstrated robust resilience. Garment shipments to the Iberian nation surged by 6 per cent, rising from $3.40 billion to $3.60 billion. Modest gains were also reported across the Netherlands, Sweden, Slovenia, Poland, Lithuania, Latvia, Hungary, Cyprus, and Bulgaria.

Domestic and Global Pressures

Industry leaders point to a confluence of internal domestic hurdles and global trade shifts to explain the vulnerabilities facing the sector.

Fazlee Shamim Ehsan, Executive President of the BKMEA, noted that the knitwear segment is particularly vulnerable because its local value addition averages around 90 per cent—considerably higher than that of woven products. Consequently, domestic operational disruptions such as ongoing gas and electricity shortages, high bank lending rates, and labour unrest hit the knitwear supply chain first and hardest.

Furthermore, broader macroeconomic pressures have intensified competition. Higher tariffs imposed under US trade policies under President Donald Trump have reshaped global trade flows, prompting major competitors such as China and India to shift their strategic focus towards the EU market. Compounded by rising domestic labor wages and escalating operational overheads, Bangladeshi apparel manufacturers face an uphill battle to maintain their competitive edge in traditional European strongholds.