Bangladesh’s garment industry is facing growing production disruption from gas and power shortages linked to the wider Middle East energy crisis, Reuters reported on September 22.
A recent survey of 134 knitwear factories found that 78% had partially halted production because of energy shortages since late August, while 55% said buyers had cancelled or reduced orders. Factories also reported shipment delays and pressure to offer discounts.
The sector is central to Bangladesh’s economy, accounting for more than 80% of export earnings, employing about four million workers and contributing around 10% of gross domestic product.
Some manufacturers have invested heavily in backup energy. Reuters highlighted 4A Yarn Dyeing, a supplier to brands including Walmart, Gap and Next, which meets about 40% of its electricity needs from solar power and relies on its own gas and diesel generation for much of the remainder.
The company said higher diesel costs have increased its monthly fuel bill and raised production costs by roughly 2% to 3%. Bangladesh also raised fuel prices by up to 17.4% on September 21, adding further pressure on manufacturers.
Industry executives told Reuters that persistent gas shortages and power cuts could weaken Bangladesh’s competitiveness against regional rivals such as Vietnam and India.
The extent of the longer-term impact will depend on energy availability, fuel costs, buyer confidence and how quickly manufacturers can diversify their power sources.