Making the most of the festival economy

From two Eids to Durga Puja, Pahela Baishakh, Pahela Falgun and even Christmas, the calendar in Bangladesh is filled with occasions that bring people together in celebration. Yet festivals are not merely cultural or religious events. They are also powerful economic drivers. A huge volume of consumption, trade and informal transactions takes place during these occasions. Despite this enormous activity, the country has largely failed to recognise and harness what could be called the “festival economy”.

For a country seeking to build a trillion-dollar economy and generate employment for millions, this deserves far greater attention. The festival economy represents an existing engine of domestic demand that could strengthen local industries, generate tax revenue and even create jobs.

Take Eid-ul-Fitr. The market surrounding this single festival can reach nearly Tk 2 lakh crore. Almost half of this is driven by clothing sales alone. For the retail apparel sector, about 60 percent of annual sales occur during the two Eids. A study by BRAC Business School in 2011 estimated that roughly 40 percent of annual consumer spending on food and household goods also takes place during this period. For many SMEs, Eid accounts for nearly 40 percent of annual income.

Yet the question remains how much of this demand is met by domestic production. A significant share of cosmetics, toys, gift items, fashion accessories and electronics sold during Eid is imported. As a result, while the market expands, the industrial base of Bangladesh does not necessarily strengthen. Eid-ul-Azha is another major economic event. Activity during this period, including livestock trade, transport, slaughtering services, refrigeration and household consumption, approaches Tk 1 lakh crore. The festival also injects significant liquidity into rural areas. Official estimates suggest around 11 million animals are sacrificed each year.

Yet the leather sector reflects a missed opportunity. Millions of hides are collected during Eid-ul-Azha. Bangladesh once earned more than $1 billion annually from leather and leather goods exports, but this has declined to around $800-$900 million. Poor preservation, weak supply chain management and the absence of internationally compliant waste treatment in the tannery industry have discouraged global buyers.

Another important dimension of the festival economy is Zakat. During Ramadan and Eid, charitable giving reaches its peak. Estimates suggest potential Zakat in Bangladesh could reach nearly Tk 0.88 lakh crore, almost 4 percent of GDP. Yet most of this wealth is distributed informally, without institutional coordination or long-term poverty reduction strategies. As a result, recipients often remain dependent on charity instead of moving towards productive livelihoods.

Other festivals also generate substantial economic activity. Durga Puja creates a market worth roughly Tk 20,000 crore through spending on mandaps, decorations, clothing, bangles, sweets and handicrafts. Pahela Baishakh, Pahela Falgun and Valentine’s Day together drive a market worth more than Tk 15,000 crore through fashion, gifts, dining and cultural events.

Despite this vibrant activity, the festival economy remains largely informal. Nearly 70 percent of transactions take place outside formal channels. With a tax to GDP ratio of around 7 to 8 percent, one of the lowest in South Asia, the government captures only a small fraction of the value created during festivals. Informal employment, estimated at about 80 percent of the labour force, further limits integration with banking and digital financial systems.

Tourism also presents an opportunity. Festivals such as Pahela Baishakh or Durga Puja could become international cultural attractions with the right branding, packaging and infrastructure.

The festival economy already exists in Bangladesh. The demand is there, the cash flow is there, and the cultural synergy is undeniable. What is missing is a strategic framework that links this economic activity with domestic production, formal finance and long-term industrial development.

The writer is an economic analyst