DHAKA - BANGLADESH'S crucial jute sector has shed 25,000 jobs and shut three factories after a massive slump in export triggered by the global economic downturn, the industry said on Thursday.

The Bangladesh Jute Spinners Association said the country's 59 jute yarn factories had slashed production by 30 per cent in the last three months as demand for their products nosedived in European markets.

'In the last month, the factories have cut more than 25,000 jobs. Three jute spinners... have already been shut down,' said secretary general Shahidul Karim.

According to the government's Export Promotion Bureau, jute goods exports plunged by 18 per cent to US$136.83 million (S$206.42 million) in the six months to December.

'The situation is getting worse day by day as the global recession has wreaked havoc on the European companies to whom we supply most of our jute yarn. In the next few weeks more factories will have to draw shutters,' he said.

Jute goods - such as sacking, yarn and floor carpets - are Bangladesh's third largest export. The sector directly employs some 125,000 people, plus more than 20 million farmers grow it as cash crop every year. -- AFP