New Delhi, April 9: A recent report from the World Bank indicates that prolonged conflicts in the Middle East could negatively impact Bangladesh’s economy. This situation may lead to increased inflation, a rising current account deficit, weakened exports, reduced remittances, and diminished government spending capacity due to rising energy subsidies.
The World Bank’s “Bangladesh Development Update” report estimates that the country’s economic growth rate may drop to 3.9% in the fiscal year 2026.
The report highlights that Bangladesh is already grappling with several challenges, including rising poverty, persistently high inflation, pressure on the banking sector, weak revenue collection, and a decline in private investment. The ongoing crisis in the Middle East has exacerbated these issues.
Inflation is projected to remain at 8.5% in the fiscal year 2026, with both food and non-food prices remaining elevated. Low-income individuals are experiencing stagnant wages, which diminishes their purchasing power.
The poverty rate in Bangladesh has increased from 18.7% in 2022 to 21.4% in 2025, pushing approximately 1.4 million more people into poverty.
The report also notes that limited foreign exchange reserves, stringent financial and monetary conditions, and a fragile banking system have reduced Bangladesh’s capacity to withstand prolonged shocks, particularly affecting the poor and vulnerable populations.
However, the report suggests that if political stability is maintained after the 2026 elections and structural reforms are implemented swiftly, there could be improvements in the economy.
Jean Pesme, Director of the World Bank’s Bangladesh and Bhutan Division, stated that without solid reforms in revenue collection, the financial sector, and the business environment, the economy’s strength will not be sustainable in the long term.
Senior economist Dhruv Sharma emphasized the need for improvements in the business environment to create jobs for the rapidly growing workforce and maintain economic growth.
The report concludes that measures such as regulatory reforms, better competition policies, equal opportunities for state-owned enterprises, simplifying trade policies, and improving electricity supply will be crucial for private sector growth and job creation.
Leave a Comment