At Hazrat Shahjalal International Airport, the departures never stop. Each day, thousands of Bangladeshis leave for cities in the Middle East, carrying plastic-wrapped suitcases and the weight of family expectations.
Their journeys are not just personal transitions but economic lifelines sustaining millions back home. For decades, this steady outflow of labour has underwritten Bangladesh’s macroeconomic stability. Yet what appears to be a dependable pillar is, in reality, deeply exposed to forces far beyond our control.
Rising tensions in the Middle East and the fragility of regional diplomacy are once again unsettling the region. These developments may seem distant, but their implications for Bangladesh are immediate.
The country’s reliance on Gulf economies for employment and remittances means that instability there can quickly translate into economic stress here. Even without open conflict, a prolonged “cold peace” can quietly reshape economic priorities in ways that undermine migrant employment.
This risk is often overlooked. Gulf governments are increasingly directing resources toward defense, strategic industries, and high-profile megaprojects tied to long-term transformation plans.
While these signal ambition, they also alter labour demand. Construction -- where Bangladeshi workers are heavily concentrated -- is typically the first sector to slow when uncertainty rises. The threat is not sudden expulsion, but a gradual erosion of opportunity.
Remittances remain central to Bangladesh’s economic model. According to the World Bank, they account for around 6-7% of GDP. Bangladesh Bank data shows inflows exceeding $24 billion in the 2023–2024 fiscal year, providing a critical buffer against rising import bills and currency pressures.
However, these headline figures mask vulnerabilities. A portion of remittances continues to flow through informal channels when exchange rate gaps widen. In times of external shock, this diversion can intensify, weakening the central bank’s ability to manage reserves precisely when stability is most needed.
The geographic concentration of these inflows deepens the risk. Data from the Bureau of Manpower, Employment and Training indicates that over 70% of Bangladeshi migrant workers are employed in Gulf Cooperation Council countries, with Saudi Arabia alone hosting nearly three million.
This level of dependence on a single region creates structural exposure. Even a partial disruption can have significant consequences. A 20% decline in employment or wage flows could translate into a loss of $4-5bn annually, enough to strain foreign exchange reserves.
The transmission channels of such a shock are clear. Any escalation involving Iran, particularly disruptions in the Strait of Hormuz, through which about one-fifth of global oil supply passes, according to the US Energy Information Administration, would raise global energy prices.
For Bangladesh, heavily dependent on imported fuel, this would fuel inflation. Yet the deeper impact would come through Gulf economies themselves: Slower investment, delayed infrastructure projects, and shifting fiscal priorities. Migrant workers would face contract uncertainty, wage delays, and job losses.
Recent history offers a stark precedent. During the Covid-19 pandemic, more than 400,000 Bangladeshi migrant workers returned home after losing employment across the Gulf, according to the Ministry of Expatriates’ Welfare and Overseas Employment.
Many struggled to reintegrate, exposing the absence of a robust safety net. Today, the macroeconomic context is even more fragile.
Foreign exchange reserves have declined from their 2021 peak, while import dependence for fuel, fertilizer, and industrial inputs remains high. Remittances, averaging around $2bn per month, remain one of the few stable sources of foreign currency.
For households, the implications are immediate. A decline in remittances would weaken the taka, raise import costs, and intensify inflation.
Food prices, already sensitive to global shocks, would climb further. The burden would fall disproportionately on lower and middle-income families, many of whom rely directly or indirectly on migrant earnings. What appears as a geopolitical shift abroad would be felt at home as shrinking purchasing power.
Addressing this vulnerability requires more than rhetorical commitment to diversification. Expanding labour markets to East Asia or Eastern Europe is often proposed, but these pathways face real constraints.
Countries like Japan and South Korea maintain tightly regulated entry systems, while Eastern European destinations present language and regulatory barriers.
A more immediate strategy may lie in broadening engagement within the wider Middle East and parts of Africa, where emerging construction and service sectors offer new opportunities.
At the same time, the structure of labour export must evolve. Bangladesh cannot remain a supplier of predominantly low-skilled workers.
According to BMET data, most outgoing workers have limited formal education. Upskilling is frequently cited as a solution, but it requires more than training centres. It demands international recognition of credentials and enforceable agreements with destination countries.
The Philippines offers a useful model, where bilateral arrangements link skill certification to minimum wage standards, improving both job security and income.
Policy innovation is also needed on the financial side. Rather than viewing remittances solely as a flow, Bangladesh can transform them into a buffer.
Instruments such as diaspora bonds or remittance-backed securities could provide access to financing during external stress. Countries like India and Israel have successfully leveraged their diasporas in this way. For Bangladesh, such mechanisms could help stabilize reserves if inflows weaken temporarily.
Energy policy must also be part of the equation. Reducing dependence on imported fossil fuels through investment in renewable energy and domestic capacity would lessen exposure to global shocks.
As the International Energy Agency has noted, diversified energy systems are more resilient to price volatility. For Bangladesh, this is not just an environmental priority but a macroeconomic necessity.
A common counter-argument is that Gulf economies are too dependent on South Asian labour to significantly reduce their workforce.
While partly true, this misses the point. The risk is not sudden collapse, but incremental change.
Slower project pipelines, tighter fiscal conditions, and evolving labour policies can gradually reduce demand without dramatic headlines.
For a country as reliant on remittances as Bangladesh, even modest shifts can have outsized effects.
The political economy of reform complicates the path forward. Remittances have long been a powerful tool for poverty reduction. Reducing reliance on Gulf labour markets without credible alternatives carries short-term risks.
Yet postponing adjustment only increases long-term vulnerability. The challenge is not awareness, but aligning policy incentives with future risks.
Bangladesh’s economic future will depend not just on growth, but on resilience. The concentration of labour and remittance flows in a geopolitically volatile region is no longer a manageable risk -- it is a structural fault line.
The warning signs are already visible in fluctuating reserves and persistent external pressures. If the next Gulf crisis intensifies, the costs will be counted not in diplomacy, but in lost jobs, shrinking incomes, and diminished stability at home.
Hurmetun Nesa Labiba is a Research Associate at the Bangladesh Institute of Governance and Management (BIGM).