“Although the country has some reserves of oil and LNG, a prolonged disruption to fresh imports may quickly deplete existing stocks.”
Selim Raihan. Sketch: TBS
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Selim Raihan. Sketch: TBS
Bangladesh’s economy faces a significant risk of sudden uncertainty if the conflict in the Middle East expands further, economist Professor Selim Raihan has warned.
In a Facebook post yesterday (4 March), Raihan said the situation became more alarming after Iran on Monday declared the closure of the Strait of Hormuz, triggering sharp volatility in the global energy market.
“Tehran has reportedly warned that its Revolutionary Guard and navy would take strict action against any vessel attempting to cross the strategic waterway.”
He said that a substantial share of the world’s crude oil and liquefied natural gas (LNG) shipments pass through the Strait of Hormuz.
“Any disruption to shipping along this route could cause major interruptions in global energy supply, with immediate consequences for import-dependent economies such as Bangladesh.”
Raihan noted that Bangladesh’s energy security could come under serious strain under the current circumstances.
“Although the country has some reserves of oil and LNG, a prolonged disruption to fresh imports may quickly deplete existing stocks.”
He observed that LNG prices in the international market have already started to rise amid growing uncertainty.
“Higher import prices would increase the cost of electricity generation, as Bangladesh relies heavily on imported fuel for power production.”
If electricity and fuel prices rise, production costs across industries would increase, transport expenses would go up, and overall inflationary pressure would intensify, he said.
“The combined effect would push up the cost of living for ordinary people while weakening the competitiveness of the country’s industrial sector in export markets.”
Raihan cautioned that there is little ground for optimism that the crisis will be resolved quickly.
“A prolonged war could create significant global economic stress, which would inevitably spill over into Bangladesh’s economy through trade, energy and financial channels.”
He stressed the need for immediate government preparedness to manage potential fallout.
According to Raihan, policymakers should convene urgent consultations with business leaders, energy experts and economists to formulate a coordinated response strategy.
Among the measures he suggested are exploring alternative sources of energy supply, diversifying import origins, strengthening strategic fuel reserves, and curbing non-essential expenditure to ease fiscal pressure.
He emphasised that timely and coordinated action would be crucial in mitigating the impact of a possible prolonged global energy shock.
He added that proactive planning and swift policy coordination would be essential to safeguard macroeconomic stability and protect vulnerable groups from the brunt of potential price shocks.
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