Bangladesh has undergone a significant transformation in its economy over the past decade, where manufacturing has decreased while the services sector has seen an increase. As per the Economic Census 2024, the share of manufacturing has dwindled to just 8.77% of the total economic units of the country from 11.54% in 2013.
On the other hand, services constitute 91.23% of economic establishments. This is a deviation from the trend of development followed by other countries, which typically experience industrialization before the growth model becomes service-led.
The decline in manufacturing is viewed as an indicator of structural weaknesses and an incoherent policy, with deficiencies in investment in the sector and an increasingly import-dependent economy. Analysts fear that this premature deindustrialization could undermine Bangladesh's long-term economic resilience. Manufacturing has become crucial to hiring, productivity, and export growth in the economy.
While growth in the service sector is indeed significant, it remains lower than the losses incurred due to the decline in the manufacturing sector. From 2003 through 2013, the total number of manufacturing units more than doubled, and within the last ten years of growth, the increases have been relatively slight. In 2024, 15% more manufacturing units compared to 2013 were recorded, marking an industrial stagnation.
The decline of the manufacturing sector has arrested job creation to a level that is of serious concern in the face of 2 million young unemployed people entering the labor market annually. Experts opine that the service sector, as retail-based and dependent on manufactured goods, will not absorb the increasing number of youth in any manner.
The main limitations to manufacturing development are poor infrastructures, crises in energy production, and unsound revenue collection policies. Due to high prices of land and development costs as well as the hassle of getting a gas connection or other necessary inputs, many intending investors are forced away. Thereby, numerous businesses are adopting services and trade sectors.