Bangladesh's garment exporters fear prolonged protests in France, Italy and other European countries could slow down the region's economy, weakening consumer purchasing power and dampening demand for apparel.
At the same time, the government's recent restrictions on yarn sourcing could push up production costs just as European buyers are tightening prices rather than accepting increases, industry insiders said.
The concerns come as Bangladesh awaits a new wage hike for ready-made garment (RMG) workers, which could further increase production costs in the country's largest export-earning sector.
Exporters are also concerned that Bangladesh could lose ground to competitors such as India and Vietnam, which have signed free trade agreements (FTAs) with the European Union, potentially giving them preferential market access.
"One of my major buyers in France instructed me yesterday (Monday) to put an order on hold, although we had initially reached an agreement," Fazlee Shamim Ehsan, chief executive officer of Narayanganj-based knitwear manufacturer Fatullah Fashion Limited, told The Business Standard yesterday.
Ehsan, also executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said the French buyer is concerned that prolonged protests could further weaken the economy, erode consumers' purchasing power, and affect apparel demand.
The European Union is Bangladesh's largest export destination, accounting for about 50% of the country's total exports, according to the Export Promotion Bureau (EPB).
MA Jabbar, managing director of DBL Group, said Bangladesh is already facing increased competition in the European market.
"If fresh instability emerges there and persists for a long time, it will negatively affect Bangladesh's exports," he said.
Asif Ashraf, managing director of Urmi Group, which exports apparel to EU countries, expressed similar concerns.
However, Shovon Islam, managing director of Sparrow Group, said the decline in orders was driven less by protests than by Europe's broader economic slowdown.
"Order flows are declining in the US market as well. But the situation is much worse in the European market," he said.
The latest data from Eurostat, the European Union's statistical office, show that the bloc's apparel imports fell by 1.29% in January-August 2026 compared with the same period in 2025.
Bangladesh's apparel exports to EU member states declined by 12.67% year on year during the same eight-month period, according to the report. However, EPB data indicate that Bangladesh began to regain market share in August and September.
Shovon said he did not believe protests alone would cause apparel orders to decline and expected the demonstrations to be short-lived.
Protests have spread across several European countries, including France, Italy, Portugal, Belgium and Spain, amid grievances over the cost of living, fuel prices, housing affordability, education and public services, according to international media reports.
The European Commission's economic forecast, published in May 2026, projected EU economic growth of 1.1% in 2026, down from 1.5% in 2025.
Yarn import restrictions add to cost pressures
The government has withdrawn bonded warehouse facilities for imports of 10-30-count yarn used in knitwear production to protect the domestic textile industry.
Under the revised arrangement, importers must provide a bank guarantee equivalent to the value of the imported yarn. The guarantee can be released after the goods have been exported and the required supporting documents submitted.
Garment exporters say the measure acts as a non-tariff barrier, pushing manufacturers towards locally produced yarn, which they say is more expensive. With orders from Europe weakening, they fear buyers will refuse to absorb the additional costs.
Fakir Kamruzzaman Nahid, managing director of Fakir Fashions Limited, said importing 30-count combed yarn costs $3.15 per kilogram, compared with $3.75 for the same yarn in the domestic market.
"Being compelled to use locally sourced yarn will increase production costs by an average of $0.15 per unit of garment. But most of the European buyers have told us they will not agree to even a single cent increase," he said.
"As a result, we will fall further behind in terms of competitiveness in the European market," he added.
Nahid said the industry is already losing ground because of the energy crisis, rising production costs and FTAs between the EU and competing countries such as India and Vietnam.
Warning that the coming month would be crucial for the industry, he urged the government to lift the yarn import restrictions.
"If the yarn import restrictions are not lifted within this period, some of the potential orders that would otherwise have come to Bangladesh could shift to other countries, including Vietnam, Cambodia, India and Pakistan," he said.