The war in the Middle East between Iran and the joint forces of the United States and Israel has significantly disrupted global energy supply chains and the broader economy. The impact on Bangladesh is particularly severe, as the country is closely linked to the region for sourcing energy, exporting its migrant workforce and food and agricultural products, and importing essential inputs such as fertilisers.
Bangladesh is a net energy-importing country. As of March 2026, it imported roughly 95% of its oil requirements and a significant portion of its LNG from Middle Eastern countries, including Saudi Arabia, the United Arab Emirates (UAE), and Qatar. With energy supply chains from this region disrupted, Bangladesh is facing acute fuel shortages, resulting in long queues at filling stations across the country and the start of illegal hoarding.
Due to these supply chain disruptions, global energy prices have surged, forcing Bangladesh to procure energy products at higher prices. Government estimates suggest that the war could increase the country’s import bill by an additional USD 4.8 billion—a 40% rise compared to 2025 levels—on top of the previous annual energy bill of USD 12 billion. Consequently, pressure on the country’s already constrained foreign exchange reserves has intensified, raising concerns about their rapid depletion and the growing debt burden.
Traditionally, the Middle East has been the primary destination for Bangladesh’s migrant workers. According to the Bureau of Manpower Employment of Training (BMET), around 7 million workers are employed in this region. These workers are estimated to remit over USD 13.5 billion annually, which helps offset pressure on the country’s foreign exchange reserves. However, as the war has escalated across the region, the steady flows of workforce exports and remittances, as well as the safety and security of these workers, are under significant threat.
The crisis is not limited to the depletion of foreign reserves, remittance inflows and the safety and security of migrant workers. Given its far-reaching implications, it is likely to affect the country’s already fragile macroeconomic conditions adversely. In recent years, Bangladesh has been grappling with multiple macroeconomic challenges. The ongoing crisis is expected to worsen these conditions further, thereby exacerbating existing macroeconomic vulnerabilities.
The conflict has significantly impacted the economy’s growth prospects and slowed the economic recovery. In recent years, the country’s GDP growth has slowed, largely due to political instability, rising global protectionism, geopolitical fragmentation, and sluggish domestic investment. According to IMF estimates, however, the country is expected to achieve modest GDP growth of 4.7–4.9% in 2026.
The conflict may further fuel inflation, which has been hovering around 8–10%. As the energy prices have increased in the international market, after weeks of reluctance, the government has raised the prices of key energy products to avoid the growing burden of subsidies required to absorb the higher cost of energy imports. The burden has increased due to declining revenue generation (the tax-to-GDP ratio declined to 6.73% in FY2025 from 9.6% in FY2015). Maintaining low and stable inflation is highly desirable, as elevated inflation can have cascading effects on the livelihoods of ordinary people, especially people with low incomes.
The conflict is also likely to affect the export sector. If energy shortages persist, industrial production would be disrupted, and export-oriented industries and sectors would face higher energy and transportation costs, thereby reducing the country’s export competitiveness.
The crisis calls for a range of policy and adjustment measures to mitigate its adverse effects. In the meantime, the government has adopted several austerity measures, including reducing office hours to 9 am–4 pm, mandating the closure of shopping malls and markets by 6 pm, restricting decorative lighting, and setting air conditioner temperatures at 25°C or higher to curb energy consumption. The effectiveness of these measures will depend largely on robust enforcement and close monitoring of compliance, which requires greater government attention.
To offset the additional costs arising from higher global energy prices, the government has approached the World Bank and the International Monetary Fund for concessional financing. The government has introduced a fuel pass to regulate fuel sales and prevent panic buying and hoarding.
To better absorb future shocks and maintain a sustainable debt position, the government should prioritise increasing the tax-to-GDP ratio and ensuring fiscal discipline and the prudent use of foreign exchange reserves, thereby reducing reliance on external borrowing. At the same time, an uninterrupted energy supply must be ensured for industries, including small and medium enterprises (SMEs), to prevent disruptions in industrial production and ensure the timely fulfilment of export orders.
In the medium to long term, Bangladesh can reduce its dependence on the conflict-prone and volatile Middle East by diversifying its energy sourcing countries and expanding the use of renewable energy. Accelerating offshore oil and gas exploration will also be crucial for ensuring long-term energy security.
Additionally, market diversification and the development of a more skilled workforce—particularly in sectors such as nursing and caregiving—should be promoted to sustain the momentum of overseas employment. Furthermore, the families of affected workers should be brought under social safety net programs, with special support extended to those who have lost their lives in the conflict.
Ferdaus Ara Begum
CEO, BUILD