The ongoing war in the Middle East is creating both immediate and long-term risks for Bangladesh’s economy and livelihoods, particularly in energy supply, export markets and migrant income, economists said.
If the war drags on, it could create renewed pressure on the country’s macroeconomic stability, they warned at a discussion titled “The Iran War and Its Impact on Bangladesh’s Economy and Livelihoods.”
The discussion was jointly organised by Voice for Reforms and Policy Exchange Bangladesh at the BDBL Bhaban in the capital’s Kawran Bazar, on Sunday.
Dr Masrur Reaz, chairman and chief executive of Policy Exchange Bangladesh, said the impact of the ongoing conflict on Bangladesh’s economy is mainly being transmitted through three key channels—energy supply and prices, export trade, and overseas employment and remittances.
He said Bangladesh depends heavily on the Middle East for its energy imports. Nearly 80 percent of the country’s crude oil imports come from Gulf countries.
Similarly, of the nearly 6 million tonnes of liquefied natural gas (LNG) that Bangladesh imports annually, about 4 million tonnes come from Qatar.
However, LNG production in Qatar has been disrupted due to the war, while uncertainty has also emerged over shipping through the Strait of Hormuz, posing significant risks to energy supply.
Reaz said Bangladesh expects around 24 to 25 LNG cargoes between March and May, at least 18 of which were scheduled to pass through the Strait of Hormuz. If the war continues, these shipments could face disruption.
Energy prices are also rising sharply, he added.
Before the war began, LNG prices in the spot market ranged between $10 and $12 per MMBtu, which have now jumped to between $21 and $28.
The Singapore benchmark price for diesel in the international market has also climbed from around $80 per barrel to above $100.
“This will increase the government’s import costs and subsidy burden, and may put additional pressure on foreign exchange reserves,” he said.
According to Reaz, Bangladesh’s economy had been gradually regaining stability over the past 18 months. Foreign exchange reserves rose from around $19–20 billion to over $30 billion during this period.
“But if energy import costs rise sharply, that stability could again come under pressure,” he said, adding that inflation could also increase further.
The war is already beginning to affect the export sector as well, he noted.
A large share of Bangladesh’s exports goes to Europe and North America and many shipments pass through important maritime routes close to the Middle East.
Due to security risks, many international shipping companies are now rerouting vessels around the Cape of Good Hope in Africa, increasing transport costs by up to 30 percent and extending delivery times by 10 to 16 days.
“This could reduce the competitiveness of Bangladesh’s garment sector,” Reaz said.
He added that the rising price of petroleum-based raw materials is also increasing production costs for apparel manufacturers.
For instance, the price of polyester — a key raw material for man-made fibre — has increased by around 32 percent. As a result, the cost of garment production could rise by 10 to 15 cents per unit, raising the risk of losing international orders.
Reaz said around 45 percent of Bangladesh’s total remittance inflows come from countries in the Gulf Cooperation Council (GCC).
“If the war continues for long, economic activity and employment in those countries could be disrupted, affecting remittance inflows,” he said.
Fahim Mashrur, co-coordinator of Voice for Reforms, said Bangladesh currently receives about $3 billion in remittances each month.
“If the war causes this to fall to around $2.5 billion per month, the country could face an annual shortfall of about $5 to $6 billion,” he said.
Mashrur added that Bangladesh currently spends around $10 to $11 billion annually on energy imports. If international prices nearly double, the cost could rise to $17 to $18 billion, putting significant pressure on foreign exchange reserves.
Energy expert Shafiqul Alam said Bangladesh spends nearly $20 billion a year on energy and power imports.
With electricity demand rising rapidly and supply risks emerging due to the conflict, the country could face increased load-shedding in the coming months, he warned.
Shasha Denims managing director Shams Mahmud said the country’s industrial sector is already facing various structural challenges.
“Energy uncertainty, rising transport costs and intensifying global competition could place additional pressure on industries,” he said.
Prof Dr Sahab Khan, an international relations expert, said the current conflict is not only an economic issue but also part of a broader geopolitical shift.
“The structure of global energy supply, labour markets and international trade may change in the coming years. Bangladesh needs to prepare with long-term strategies,” he said.
