The government led by Tarique Rahman is facing a mounting economic tempest as the escalating US-Israel military offensive against Iran threatens to upend Bangladesh's fragile growth.
Analysts warn that surging global energy prices, disrupted shipping lanes and a potential slowdown in remittances will thrust the newly appointed Bangladesh Bank governor into a high-stakes battle to rein in inflation and safeguard the nation's financial stability.
Bangladesh's readymade garment (RMG) sector, the backbone of the country's exports, stands particularly exposed. A substantial portion of garments bound for the European Union and Middle Eastern markets passes through the Strait of Hormuz, one of the world's most strategically vital maritime chokepoints.
Any prolonged disruption in this narrow waterway, which carries roughly 20 per cent of global oil and over 25 per cent of liquefied natural gas (LNG), could bring exports and imports to a grinding halt, sending shockwaves through the domestic economy.
Industry leaders warn that the sector teeters on a precarious edge. "Geopolitical tensions, rising energy costs, logistical hurdles and trade uncertainty are converging to create unprecedented risks," said Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association.
"Our export lead times are already under pressure. If the conflict intensifies, production, shipments and orders could be severely affected."
Economists fear that global oil prices could spike sharply if Iran moves to close the strait, connecting the Persian Gulf to the wider world. Bangladesh, heavily dependent on energy imports from the Middle East, could see import costs soar, inflation spike, and foreign exchange reserves strained.
"Any disruption in oil and gas supply will inevitably drive up domestic fuel costs, inflate electricity prices, and increase production expenses," warned former BGMEA director Mohiuddin Rubel. "Margins will be squeezed, growth will slow, and ordinary citizens will feel the pinch."
Shipping and logistics vulnerabilities amplify the threat. Harun-Ur-Rashid, chairman of the Bangladesh Container Shipping Association, cautioned that long-term hostilities could obstruct vital maritime routes, including the Suez Canal.
Bangladesh has already reduced shipments via the Red Sea due to previous regional conflicts, and any escalation involving major powers could intensify bottlenecks. "As an exporting nation, we are highly exposed. Any extended instability will disrupt both imports of raw materials and exports of finished goods," he said.
Energy security remains a pressing concern. Mohammed Amirul Haque, president of the LPG Operators Association of Bangladesh, warned that global LPG availability and prices are highly vulnerable to prolonged conflict.
"Bangladesh's energy security is fragile. A sustained war would make the situation even more precarious," he said, highlighting the direct impact on energy-intensive industries such as textiles and chemicals.
The Middle East, a key labour market for Bangladeshi workers, could also see employment and remittance flows decline if the conflict drags on. Analysts warn that prolonged instability will ripple through macroeconomic management, widening trade deficits, heightening inflationary pressures and testing the resilience of financial institutions.
Exporters draw a stark lesson from the Ukraine war, initially expected to be brief but now extending into its fourth year, which disrupted global trade and energy markets.
RMG shipments to Middle Eastern markets including Kuwait, Iraq, Iran, Bahrain and Saudi Arabia could face significant setbacks, while rising oil prices will push production costs higher, dampen consumer spending, and force exporters to rely on longer, costlier shipping routes, eroding competitiveness further.
The stakes for Bangladesh could not be higher. With exports faltering, energy bills soaring, shipping routes under threat, and remittance flows uncertain, the nation faces a convergence of external shocks that could strain growth, jobs and livelihoods.
Meanwhile, Bangladesh economy is under pressure with headline consumer inflation at 8.58?per?cent in January?2026, up from 8.49?per?cent in December?2025, underscoring persistent price pressures despite a broader easing compared with last year.
As the external sector faces mounting risks from global geopolitical tensions, analysts warn that the unfolding challenges could place the newly appointed central bank governor under intense pressure to rein in inflation and safeguard financial stability in the coming months.
As the Middle East conflict unfolds, the coming months will test the government's ability to navigate turbulence and preserve the economic lifeline for millions of Bangladeshis.
