New Delhi, March 30: According to a report by S&P Global Ratings, the ongoing crisis in the Middle East poses significant risks for South Asian nations, particularly Bangladesh, Pakistan, and Sri Lanka. These countries are heavily reliant on imported energy, and their reserve supplies are limited.
The report highlights that these nations are particularly vulnerable to rising oil prices and potential supply disruptions. A prolonged shock in the global energy market could adversely affect their sovereign credit ratings.
S&P Global Ratings is an analytical agency that provides insights on credit ratings, research, and sustainable finance. The organization emphasizes that such insights are crucial for market participants to navigate challenges and make informed decisions.
Signs of economic recovery are emerging in Pakistan, Sri Lanka, and Bangladesh. However, the report warns that persistent high energy prices and potential disruptions in trade and remittances could derail their fragile economies.
It also notes that Laos is less affected due to its reliance on hydropower generation and a more balanced financial position. While it remains vulnerable to long-term energy price shocks, conditions supporting a positive outlook for its long-term ratings are still intact.
The credit rating agency stated, “Our ratings for Bangladesh may face short-term economic disruptions associated with our base-case scenario.” If energy prices remain elevated for longer than expected, the country may encounter rising risks to its growth, inflation, and external balance.
High fuel prices could hinder the gradual decline in inflation over the next three to six months and weaken the pace of economic recovery.
The report indicates that Bangladesh’s economy is almost entirely dependent on imports for crude and refined oil products. Oil reserves are projected to last less than a month, after which consumption restrictions may become more stringent if imports are halted.
Approximately 50% of Bangladesh’s electricity is generated from gas, with about a quarter of its gas demand met through imports, which could be impacted by prolonged conflicts in West Asia.
The country is already grappling with rising inflation, which increased from 8.6% in January to 9.2% in February, alongside a prolonged economic slowdown following the fall of the previous government in mid-2024.
Bangladesh’s revenue-to-GDP ratio is among the lowest for sovereign nations, estimated to be around 9% for the current fiscal year ending in June 2026.
This conflict also presents an unwanted disruption to Bangladesh’s improving external balance situation. The report notes that as of March 12, 2026, foreign exchange reserves had risen to $29.6 billion, significantly up from $19.7 billion during the same period in 2025.
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My name is Ganpat Singh Choughan. I am an experienced content writer with 7 years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
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