The economic effects of COVID-19 on garment factories in Bangladesh

Policy brief Firms

  • COVID-19 poses a challenge to the future of Bangladesh’s apparel sector and its economy. This research provides evidence on its economic impact from a survey with a representative random sample of members from the Bangladesh Garment Manufacturers and Exports Association (BGMEA)’s members.
  • Our survey shows that, on average, BGMEA member factories experienced a decline in revenue of almost 17.4% in 2020 compared to 2019. A shock of this magnitude translates to a multibillion-dollar slump in export earnings in a sector that directly employs nearly 5 million workers.
  • Employment declined by 7.4% in the second half of 2020 compared to pre-COVID-19 levels. Factories that employ relatively higher shares of women experienced much larger employment declines (-12.9%) compared to those employing relatively more men (-3.5%).
  • The pandemic did not lead to widespread, sustained factory shutdowns. Excluding a government-declared public holiday, 25% of factories report closing for at least one day due to the pandemic. 5% of factories reported closing since the onset of COVID-19 and still being closed at the time of the survey.
  • This brief explores how this evidence can be used to inform an appropriate policy response and facilitate planning for recovery from the pandemic.