Factory activity on slow recovery path
Factory activity in Bangladesh rose 4.39 per cent year-on-year in August as the economy embarked on a journey to recovery from the wreckage caused by the coronavirus pandemic, official data showed.
The manufacturing activity, however, was 12.91 per cent lower than the level of July, pointing to the slower than expected recovery.
The Quantum Index of the large and medium-scale manufacturing industry, which accounts for 87.54 per cent of the industrial production in Bangladesh, stood at 409.83 in August this year compared to 392.61 in August last year.
It was 470.58 in July, according to the Bangladesh Bureau of Statistics (BBS).
To assess the movement of industrial production, the state-run agency collects data from state-owned enterprises and major manufacturing enterprises in the private sector. The data are collected from a total of 965 sample industries.
BBS data showed that the production of woven garments dipped 26.14 per cent in August compared to a month ago and 4.76 per cent year-on-year, highlighting the depressed demand for garment items in Bangladesh's export destinations.
Knitwear manufacturing plummeted 22.01 per cent in August from July but rose 10.24 per cent year-on-year.
Fertiliser production more than doubled to 84,470 tonnes in August compared to a month ago, pointing to the ongoing economic revival. It rose a staggering 14 times from August last year, BBS data showed.
Cement production rose 2.44 per cent year-on-year but declined 27.15 per cent compared to July.
The manufacturing of petroleum products jumped 150.80 per cent in August from July and 11.31 per cent year-on-year thanks to the easing of the lockdown that accelerated movement of people and vehicles.
In August, electricity generation recovered its lost ground both compared to the level of July this year and August last year.
The manufacturing of pharmaceuticals rose 1.16 per cent in August compared to July and 9.9 per cent in comparison to the corresponding month in 2019.
Mild-steel production slumped 7.07 per cent in August compared to a month ago and 18.62 per cent year-on-year. Jute textile's production went down 22.49 per cent year-on-year.
Tea production advanced 50 per cent in August from a month ago but was 16.17 per cent lower than the level seen in August last year.
Edible oil production was down 32.1 per cent in August compared to July and 3.86 per cent, year-on-year.
The manufacturing of soap and detergent dropped 44.32 per cent from July's level and 13.93 per cent from August last year.
"The recovery in manufacturing appears to have slowed in August, except in fertiliser and cotton textiles. This is due to weak external and domestic demand," said Zahid Hussain, a former lead economist of the World Bank's Dhaka office.
"The recovery in Bangladesh's main export markets has stumbled, and domestic consumer confidence does not appear to have returned to the pre-pandemic level."
According to the economist, it is probably not realistic to expect a sustained industrial recovery until the transmission of the virus is brought down to a manageable level.
"The government needs to make sure that the stimulus packages reach the intended targets such that existing employment is sustained and efficient firms survive the pandemic-induced crisis."