Bangladesh's Political Turmoil: Impact on the Textile Industry

By: Anisha Gupta

Bangladesh's booming textile industry, the backbone of its economy, faces severe disruption due to escalating political turmoil following Prime Minister Sheikh Hasina's fall. Strikes, factory shutdowns, and lost investor confidence threaten millions of jobs and the country's economic stability.

The fall of the Sheikh Hasina regime has sunk Bangladesh into an economic crisis unprecedented in history, and the long-spinal backbone of the economy textiles has taken the worst brunt of the impact. While the ink of political snowballing was getting darker, the signs of collapse started to show up in the economy, and the hidden vulnerabilities of the Bangladesh economy started surfacing one after another.  

The collapse lies in the backdrop of a crisis involving the textile industry, which holds a very strong position in the country's path towards economic growth. Textiles contribute to about 80% of the country's export earnings: a very critical bulwark in the national economy. However, due to the political unrest many factories have been forced to close due to strikes, road blockades, and a breakdown of law and order. Transportation difficulties have added further fuel to the crisis. International buyers who had hitherto considered Bangladesh a safe and secure place for sourcing readymade garments at low costs are rethinking their supply chain links with the country. Citing fears of supply chain disruption, several of them have either canceled their orders or are now in negotiations to have these orders placed in alternate production sites, mainly in countries with a better political climate. This loss of confidence has not only proved damaging to export revenues but has also made the country's foreign investment prospects bleak as international investors are now petrified of the risks attached to putting their money in Bangladesh. 

This ripple effect of the economic slowdown is being felt across the country. Millions of workers are faced with the daunting possibility of job losses as factories close or cut capacity. In a country where a large number of poor people live below a dollar or two in a day, the withdrawal of just one wage may result in the family falling into acute poverty. This could, in turn, further exacerbate social tensions, create more instability, and put the economy in a vicious downward spiral. 

The closure of the textile sector also brought out the risk factor in an economy which is over-dependent on one sector. Bangladesh has been dependent on the textile industry in its economy for many years. As successful as this approach has been in the historical past, it has also exposed the economy to precarious conditions where it cannot withstand outside pressures. The present crisis has only reminded the government that the structure of the economy needs change to allow diversification in industrial composition and export destinations which would help reduce susceptibility of the country to such a crisis in the future.  

The consequences of the political unrest on the local economy a far beyond the obvious ones for the textile business. This is coupled with essential services coming to a standstill manifested by regular power outages, transport snarl-ups, and lack of logistics support. This has piled up the troubles faced by businesses, which find it hard to operate at optimal performance. This can be sustained in the long term, with businesses reeling in efforts to recover lost time and prospects of growth diminishing. 

It has also ruined the international image of Bangladesh. A country that was supposed to be the next big thing in the world economy has now turned into one that one would be cautious to invest in. The impact of this severe shift in perception could last beyond the current crisis, diverting an opportunity for investment and trading away from Bangladesh, and furthering it into the stagnation of the world economy. 

 In other words, the political chaos taking place after the failure of the Sheikh Hasina government cooked the broth of an unexampled and deep economic crisis in Bangladesh. The chain reaction set up due to the failure of the textile industry has resulted in widespread unemployment, loss of investor confidence in this country, and a decline in the country's standing in the world. The current crisis of political instability in the country and the need for economic diversification indicates that, if not careful, Bangladesh runs the risk of losing its recent gains over the past decade and may experience a long spell of economic stagnation.