Economy faces multiple challenges

Bangla Press Desk:   Bangladesh’s economy faces multiple challenges amid the ongoing conflict involving Iran, the United States and Israel, with economists warning of possible shocks in energy supply, trade and labour markets.

Experts say the war could trigger disruptions in maritime transport, migrant labour markets and global energy supplies. Rising unemployment, higher dollar prices, inflationary pressure and increased production costs could also intensify economic strain. The situation has already created instability in markets and supply chains.Economists warn that the crisis could generate a chain reaction across the economy. Higher fuel prices, disruptions in global trade flows and declining competitiveness in export markets could affect Bangladesh’s economic outlook. They also foresee volatility in overseas labour markets and remittance inflows, alongside rising inflation and new pressure on foreign exchange reserves.

Higher production costs could force many small and medium-sized factories to shut down, which may reduce employment opportunities. Bangladesh’s economy also relies heavily on remittances from migrant workers in the Middle East, making it vulnerable to instability in the region.The Dhaka Chamber of Commerce and Industry (DCCI) has expressed deep concern about the possible economic impact of the Iran–US–Israel conflict. The chamber said the ongoing tensions have already disrupted global energy markets and maritime trade.

The Middle East serves as a major source of global crude oil and liquefied natural gas supply. Concerns over supply disruptions have pushed international crude oil prices above $100 per barrel. The conflict has also created volatility in global energy markets, international trade routes and financial systems.

DCCI warned that sustained high oil prices could place significant pressure on Bangladesh’s external sector. If global oil prices rise by $10 per barrel, Bangladesh’s monthly import costs could increase by about $70 million to $80 million. Higher import bills could increase demand for foreign currency and widen the trade deficit.

Tensions around the Strait of Hormuz, a key global shipping route, have also raised concerns about international maritime transport. Any prolonged disruption along this route could increase freight charges, insurance premiums and delivery times for goods entering or leaving Bangladesh.

Export-oriented industries, particularly the ready-made garment sector, may face higher logistics costs, supply chain disruptions and greater risks in maritime transport.

Economist Dr Md Ainul Islam, former general secretary of the Bangladesh Economic Association, said the conflict could create a serious risk to global energy supply.

“If an energy shortage emerges, production costs will increase at every stage. Higher production costs will eventually push up product prices and accelerate inflation,” he said.

He noted that the International Monetary Fund (IMF) has already predicted rising global inflation. Bangladesh may face even higher inflationary pressure due to its dependence on imported fuel.

Higher fuel prices could increase transport costs and create challenges for the country’s export trade. Supply chain disruptions may also place the overall economy under significant pressure.

Dr Ainul suggested that Bangladesh should increase investment in renewable energy and alternative fuel sources as a long-term strategy to reduce vulnerability to global energy shocks.

Source: daily Sun

BP/SP