Bangladesh’s economy is coming under increasing strain as global uncertainty, geopolitical tensions in the Middle East and domestic structural weaknesses converge, raising fresh concerns over energy security, inflation and overall economic stability.
Economists warn that the combination of external shocks and internal vulnerabilities could make it difficult for the government to maintain macroeconomic stability in the coming months.
Energy uncertainty intensifies
Recent military tensions involving the United States, Israel and Iran have triggered volatility in global energy markets.
The situation has worsened after disruptions in liquefied natural gas (LNG) production in Qatar, a key supplier, prompting the declaration of “force majeure” on several long-term supply contracts.
Analysts caution that prolonged instability could push up global oil and gas prices, placing additional pressure on import-dependent economies like Bangladesh.
Domestically, concerns over fuel supply have already surfaced. Drivers in several areas have reported shortages at filling stations, with long queues becoming common. While pump owners blame irregular supply, the government maintains that reserves remain adequate.
Power, Energy and Mineral Resources Minister Iqbal Hassan Mahmud Tuku attributed the situation to panic buying and hoarding, urging the public to avoid unnecessary stockpiling.
Economy-wide impact feared
Experts say any sustained disruption in energy supply would have far-reaching consequences beyond the power sector.
Bangladesh’s electricity generation is heavily dependent on gas and oil.
A shortage of fuel could disrupt power production, leading to increased load shedding.
The industrial sector is particularly vulnerable. Key export-oriented industries such as garments, textiles, cement, steel and fertiliser depend on uninterrupted power and gas supply.
Any disruption could reduce output, weaken export performance and put pressure on foreign exchange earnings.
The transport sector could also be affected, with shortages of diesel and octane disrupting the movement of goods and pushing up market prices.
Agriculture, another critical sector, faces risks as well. Fuel is essential for irrigation pumps, tractors and other machinery.
Disruptions could affect crop production, raising concerns over food security.
Inflation and fiscal strain
Rising energy prices in the international market are likely to increase import costs, putting additional pressure on foreign exchange reserves.
Higher fuel costs also tend to translate quickly into increased prices for essential goods, fuelling inflation.
BNP Secretary General Mirza Fakhrul Islam Alamgir warned that the Middle East conflict could have a direct impact on domestic prices, as higher oil costs would raise the cost of daily necessities.
Structural weaknesses deepen concern
Economists note that Bangladesh is already facing multiple structural challenges, including banking sector weaknesses, low private investment and limited revenue collection.
Debapriya Bhattacharya, distinguished fellow at the Centre for Policy Dialogue (CPD), said energy and banking remain the two most critical sectors underpinning the economy.
“Just as the human body has two lungs, the economy also has two lungs—the energy and banking sectors. At present, both are in a fragile condition,” he said.
He also pointed to rising inflation, declining private sector credit growth and high interest rates as key concerns.
Investment and banking risks
Private investment has slowed amid high borrowing costs, while weaknesses in the banking sector -- particularly high levels of non-performing loans -- continue to pose risks.
Experts say improving governance in financial institutions, strengthening regulatory oversight and recovering defaulted loans are essential to stabilising the sector.
At the same time, attracting foreign investment will be crucial, as relying solely on domestic investment may not be sufficient to sustain growth.
With global risks intensifying and domestic challenges unresolved, economists warn that Bangladesh faces a difficult period ahead.
Ensuring energy security, stabilising the banking sector, controlling inflation and boosting investment will be critical priorities as the government navigates mounting economic pressure.