Published: 01:24 AM, 30 August 2026
6 Lakh Job Losses Might Hit Bangladesh: World Bank
The war in the Middle East is also affecting Bangladesh's economy. Alongside rising fuel prices, gas shortages are disrupting production at industrial plants and reducing fertilizer production.
Transportation and production costs are increasing. The effects are being felt in the prices of goods, agriculture, people's incomes and livelihoods, and employment. If the crisis persists, nearly 600,000 people in Bangladesh could be at risk of losing their jobs, according to the World Bank. At the same time, the number of people expected to move out of poverty this year could also decline significantly.
These risks were highlighted in a World Bank assessment conducted in mid-June. The assessment was prepared as part of a proposed project to provide budget support to the government.
Bangladesh has entered this crisis at a time when its economy was already under pressure. High inflation, a weak banking sector, and the government's limited fiscal capacity have meant that new employment opportunities are also not being created at the expected rate.
If higher fuel costs are gradually passed on to consumers, inflation could rise by more than 0.5 percentage points. Higher fuel prices would increase transportation and electricity-generation costs, as well as the production costs of industrial plants. Ultimately, this would push up the prices of food and other goods.
Finance and Planning Minister Amir Khosru Mahmud Chowdhury, however, recently said that inflation had fallen below 9 percent in July. He also believes that inflation would have declined further if there had been no war in the Middle East.
The conflict in the Middle East is having a direct impact on Bangladesh's energy sector. More than half of Bangladesh's primary energy supply comes from gas. However, domestic gas production has fallen by 15 percent from its peak in 2016. Meanwhile, 60-65 percent of Bangladesh's imported crude oil and 55-60 percent of its LNG come from the Middle East.
Amid volatility in the international energy market caused by the war, five of Petrobangla's six LNG supply contracts have been declared under "force majeure." LNG prices in the spot market have risen to $24-28 per MMBtu, more than double their previous levels. Amid the crisis, Bangladesh had to pay more than $24 per unit for two LNG cargoes scheduled for delivery in September.
According to the World Bank, government subsidies for the energy sector could rise to 2.8 percent of GDP in fiscal year 2025-26. Overall, the subsidy burden could increase from $2.5 billion to $4.8 billion. This could create a risk of reduced government spending in other sectors.
The energy crisis is also affecting agriculture. Around 40 percent of the country's population depends on agriculture in one way or another. Small farmers will be particularly vulnerable if fertilizer production and imports are disrupted.
Bangladesh uses an average of 391.9 kilograms of fertilizer per hectare, more than twice the global average. Gas is also required for fertilizer production in the country. Already, five of the country's six urea fertilizer plants have had to suspend production because of gas shortages. Meanwhile, urea prices have risen by around 30 percent. The World Bank fears that fertilizer prices could double if the crisis continues.
The health sector is also facing higher costs because of fuel and supply shortages. Bangladesh has around 19,000 government health facilities and 6,200 private hospitals and clinics. If electricity supplies are disrupted, private facilities have to operate generators, increasing their fuel costs.
Around 250 pharmaceutical manufacturers in the country import raw materials for producing medicines. In addition, more than 90 percent of hospital equipment is dependent on imports. As a result, disruptions in international supply chains and higher shipping costs are also increasing expenses in the health sector.
Professor Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), believes that the effects of the Middle East war have already begun to impact employment. He said that new gas connections are not being provided to industrial plants. In some places, working hours have been reduced, while some factories have shut down because of fuel shortages.
In his view, recent incidents involving factory closures and workers losing their jobs demonstrate the seriousness of the situation. The World Bank's warning that 600,000 jobs could be lost makes this reality even clearer.
Overall, the war in the Middle East is creating pressure on Bangladesh not only through an energy crisis, but also simultaneously affecting employment, agriculture, inflation, poverty, and healthcare. If the crisis continues for an extended period, low-income people will have to bear the greatest burden.
