Bangladesh’s large-scale manufacturing (LSM) output rose by nearly 7% in July, the first month of the 2026 fiscal year, supported by robust growth in the clothing sector and several allied industries, according to official data.

Figures from the Bangladesh Bureau of Statistics show that the ready-made garment (RMG) sector, which carries a 61% weight in the industrial production index, grew 11.2% year-on-year. Out of 23 tracked sectors, 19 recorded growth, while five contracted.

Tobacco products posted the highest increase at 26.5%, followed by pharmaceuticals at 17%, transport equipment at 12.6%, food manufacturing at 10.1%, leather goods at 9%, electrical equipment at 6.5%, and beverages at 6.4%.

By contrast, textiles shrank 4.2%, motor vehicles dropped 8.4%, coke and refined petroleum products declined 3%, while machinery and chemicals slipped by less than 1%.

Economists and manufacturers credit the expansion to the RMG industry’s strong performance, rising import demand, and a relatively favourable external environment.

“The manufacturing sector is clearly on an upswing in a turnaround,” said Dr M Masrur Reaz, chairman of Policy Exchange Bangladesh, while cautioning that inflation must ease further to sustain investment.

A senior Bangladesh Bank official said allied industries were benefiting from tariff relief in the US and noted that credit was now flowing more towards genuine businesses rather than politically connected conglomerates.

He added, however, that foreign direct investment would be critical to sustaining momentum, as domestic savings remain at around 23% of GDP.