Middle East War Threatens Jobs, Raises Poverty Risks in Bangladesh: World Bank

The ongoing war in the Middle East is increasingly affecting Bangladesh's economy, with rising energy prices and gas shortages disrupting industrial production, reducing fertilizer output and pushing up transportation and manufacturing costs.

The World Bank has warned that if the crisis persists, around 600,000 people in Bangladesh could be at risk of losing their jobs. At the same time, the number of people expected to escape poverty this year could fall sharply.

The risks were highlighted in a World Bank assessment conducted in mid-June as part of a proposed project to provide budget support to the Bangladesh government.

Bangladesh entered the crisis at a time when its economy was already under pressure from high inflation, a fragile banking sector and limited fiscal capacity. New jobs are also not being created at the expected rate.

According to the World Bank, the number of poor people in Bangladesh increased by an estimated 1.4 million in 2025. Without the Middle East conflict, around 1.7 million people could have moved out of poverty in 2026. However, that figure could fall to about 500,000 because of the war, meaning nearly 1.2 million additional people could lose the opportunity to escape poverty.

The World Bank estimates that higher prices could account for around 10 percent of the increase in poverty this year.

If higher fuel costs are gradually passed on to consumers, inflation could rise by more than 0.5 percentage points, the World Bank warned. Higher fuel prices would increase transportation and power-generation costs as well as industrial production expenses, eventually pushing up the prices of food and other essential goods.

Finance and Planning Minister Amir Khosru Mahmud Chowdhury recently said inflation had fallen below 9 percent in July. He also suggested that inflation would have declined further if there had been no war in the Middle East.

The conflict is having a direct impact on Bangladesh's energy sector. More than half of the country's primary energy supply comes from natural gas, but domestic gas production has fallen by around 15 percent from its 2016 peak.

At the same time, around 60–65 percent of Bangladesh's imported crude oil and 55–60 percent of its LNG come from the Middle East.

Amid volatility in global energy markets, five of Petrobangla's six LNG supply contracts have been declared under force majeure. LNG prices in the spot market have risen to around $24–$28 per MMBtu, more than double previous levels.

To secure two LNG cargoes for September amid the supply crunch, Bangladesh had to pay more than $24 per unit.

The World Bank estimates that government subsidies for the energy sector could rise to 2.8 percent of GDP in fiscal year 2025–26. Overall subsidy requirements could increase from $2.5 billion to $4.8 billion, potentially forcing the government to reduce spending in other sectors.

The energy crisis is also putting pressure on agriculture, a sector on which around 40 percent of Bangladesh's population depends directly or indirectly.

Small farmers are 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. Natural gas is also essential for domestic fertilizer production.

Five of the country's six urea fertilizer plants have already been forced to suspend production because of gas shortages. Meanwhile, urea prices have increased by around 30 percent. The World Bank has warned that fertilizer prices could double if the crisis continues for an extended period.

Energy and supply disruptions are also increasing costs in the healthcare sector.

Bangladesh has around 19,000 government health facilities and approximately 6,200 private hospitals and clinics. Power shortages are forcing private healthcare providers to operate generators, increasing their fuel costs.

The country's pharmaceutical industry is also heavily dependent on imports. Around 250 pharmaceutical manufacturers import raw materials for medicine production, while more than 90 percent of hospital equipment is imported.

As a result, disruptions to global supply chains and rising shipping costs could further increase healthcare expenses.

Professor Mostafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), said the impact of the Middle East conflict was already being felt in Bangladesh's labor market.

He said new gas connections were not being provided to industries, while some factories had reduced working hours and others had been forced to shut down because of fuel shortages.

According to Rahman, recent factory closures and job losses among workers demonstrate the seriousness of the situation. The World Bank's warning that around 600,000 jobs could be at risk further highlights the potential scale of the crisis.

Overall, the Middle East conflict is creating multiple pressures on Bangladesh simultaneously—from energy and employment to agriculture, inflation, poverty and healthcare. If the crisis continues, low-income households are likely to bear the heaviest burden.