Bangladesh's industrial sector saw a strong recovery in the first quarter of FY26, driven by robust growth in construction, mining, and manufacturing activities.
According to the latest Bangladesh Bank (BB) data, industrial growth rose to 6.97 per cent in Q1 of FY26, a significant improvement from 2.38 per cent in the previous quarter and 3.59 per cent in the corresponding period of the previous fiscal year.
The turnaround was supported by strong performances in key sub-sectors.
Construction led the expansion with a 12.41 per cent growth, followed by mining and quarrying at 6.89 per cent and manufacturing at 6.17 per cent.
However, the electricity, gas and water supply sub-sector recorded a deceleration of 10.7 per cent during the quarter, reflecting continued stress in energy supply and utility services.
The Quantum Index of Industrial Production (QIIP) increased by 6.95 per cent in Q1 of FY26, compared to 1.65 per cent growth in Q1 of FY25 and 3.57 per cent growth in Q4 of FY25, indicating a steady pickup in industrial output.
The General Index of Large-Scale Manufacturing (LSM) industries registered a robust growth of 7.8 per cent in Q1 of FY26.
This marks a notable rebound from a contraction of 2.9 per cent in Q1 of FY25 and a sharp decline of 10.1 per cent in Q4 of FY25.
Most manufacturing segments recorded remarkable growth during the quarter, except leather, chemical, and machinery products.
Motor vehicles and basic metals emerged as the top contributors to LSM growth, registering impressive expansions of 32.0 per cent and 31.3 per cent, respectively.
The Index of Small, Medium and Micro (SMM) industries also returned to positive territory, recording a 5.6 per cent growth in Q1 of FY26, compared to a 0.2 per cent decline in the same quarter of the previous year.
Pharmaceutical products posted the highest growth of 48.3 per cent, while leather and tobacco products grew by 20.5 per cent and 20.2 per cent, respectively.
However, electrical equipment and motor vehicles experienced negative growth within the SMM segment during the quarter.
Meanwhile, the Index of Cottage Industry expanded by 5.7 per cent in Q1 of FY26, higher than the 2.5 per cent growth in Q1 of FY25 but slightly lower than the 6.3 per cent growth recorded in Q4 of FY25.
Within this category, tobacco products recorded the highest growth of 31.5 per cent, while beverage, wood products, motor vehicles, paper products, and coke and refined petroleum products posted negative growth.
Economists say the strong Q1 performance suggests a gradual normalisation of industrial activities after previous slowdowns, supported by improved domestic demand and relative macroeconomic stability.
Dr Masrur Reaz, chairman of Policy Exchange Bangladesh, says the rebound in large-scale manufacturing and construction indicates the beginning of business confidence rebound.
"The strong recovery in LSM, particularly in motor vehicles and basic metals, reflects investment and consumer demand," he says.
However, he cautions that sustained industrial growth will depend on addressing structural constraints, particularly in the energy sector.
"The contraction in electricity, gas and water supply is a concern. Without reliable energy supply and improvements in logistics and financial sector stability, maintaining this momentum could be challenging," Dr Reaz adds.
He further notes that the sharp growth in pharmaceuticals and certain consumer goods signals resilience in domestic-oriented industries, but export-oriented and capital-intensive sectors will require policy support to remain competitive.
Analysts believe if the current trend continues and supply-side bottlenecks are eased, the industrial sector could play a pivotal role in accelerating the overall gross domestic product (GDP) growth in FY26.
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