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Bangladesh's economy faces increasing pressure from geopolitical tensions alongside domestic structural weaknesses such as high non-performing loans, limited fiscal space and sluggish investment, experts and economists warn.
The alert bell was rung Sunday amid escalating tensions in the Middle East that they forecast could significantly heighten these vulnerabilities by pushing up global energy prices, raising import costs and weakening export competitiveness.
The remarks came at the launch of the Monthly Macroeconomic Insights (MMI) report prepared by the Centre for Macroeconomic Analysis of the Policy Research Institute of Bangladesh (PRI).
Mohammad Hatem, President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), attended as chief guest the discussion titled 'Global Turbulence and Bangladesh's External Sector'. Held at the PRI office, the meet was chaired by PRI chairman Dr Zaidi Sattar.
The session featured a keynote presentation by Dr Ashikur Rahman, Principal Economist at PRI, moderated by Dr Sadiq Ahmed, Vice Chairman of PRI. Dr M Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh, also spoke at the event.
The keynote presentation highlights Bangladesh's heavy dependence on imported energy, estimating the annual energy-import bill at around US$12 billion, much of which comes from the Middle East.
Even a $10-per-barrel increase in global oil prices could raise Bangladesh's annual import cost by about $900 million, while a $20 rise could add nearly $1.8 billion.
Following recent geopolitical tensions, Brent crude prices climbed to around $92 per barrel, about 42-percent higher than the pre-conflict level of $65. LNG prices in Europe also rose nearly 70 per cent, reflecting heightened market volatility, the paper reveals.
Dr Zaidi Sattar said global geopolitical tensions could potentially escalate into broader conflict, posing risks not only to the global economy but also to developing countries.
He also supports Bangladesh's request to the United Nations for deferment of least-developed-country (LDC) graduation amid global uncertainty.
Dr Ashikur Rahman said Bangladesh has faced multiple external shocks since 2020, including the COVID-19 pandemic, the Ukraine war, trade-tariff uncertainty and Mideast tensions.
These shocks, he feels, have slowed growth momentum, with GDP growth in FY25 having fallen to around 3.6 per cent.
He emphasises the need for structural reforms in the financial and fiscal sectors, saying, "Reform, reform, reform should be the mantra in the early phase of the political cycle."
Mohammad Hatem said the Bangladeshi taka is estimated to be about 34-percent overvalued against the US dollar, hurting export competitiveness.
He said if $500,000 is received as export bill, even 20-percent overvaluation can cause a loss of around Tk5.1 million, noting that factory wage costs are also affected.
He mentions that around 80 per cent of factories have been operating at a loss for years and many are running at 50-60 per cent of capacity, making significant loss of factories.
Dr M. Masrur Reaz warns that the Middle East conflict could affect Bangladesh through energy-supply disruption, trade-cost increases and employment channels.
He mentions that LNG imports from the Middle East account for about 70-80 per cent of Bangladesh's supply and that shipping delays through the Strait of Hormuz could worsen import pressure.
On exports, he notes that shipping costs are rising as global routes avoid conflict zones. "That usually means a minimum of 10 additional days and around 30-percent extra cost."
Dr Sadiq Ahmed said Bangladesh's external sector remained fragile as export earnings declined by more than 3.0 per cent in the first eight months of FY26.
He feels that import growth of 8-10 per cent is needed to sustain higher GDP growth and warns that prolonged conflict could seriously threaten energy security.
He has urged policymakers to adopt emergency-level macroeconomic coordination to manage fiscal stress, banking-sector vulnerabilities and external shocks, stressing that there is little room for complacency.
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