OVER 10 million Bangladeshi migrant workers send home an estimated $22 billion in remittances annually, making it the country鈥檚 second-largest source of foreign exchange after garment exports. More than 60 per cent of this originates from the Middle East, with Saudi Arabia, the United Arab Emirates, Qatar, and Kuwait leading the way. At the same time, Bangladesh relies on the region for over 80 per cent of its crude oil imports, essential to fuelling its rapidly industrialising economy.
However, the volatile geopolitical landscape of the Middle East, shaped by escalating Iran-Israel tensions and the ongoing instability in Syria, poses a dual threat to Bangladesh. Disruptions in remittance inflows and energy imports could result in significant economic challenges, jeopardising household incomes, national development plans, and energy security.
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Remittance at risks
IN 2024, remittances constituted nearly 6 per cent of Bangladesh鈥檚 gross domestic product. The Gulf Cooperation Council nations, particularly Saudi Arabia, which employs over 2.2 million Bangladeshi workers, remain the primary sources. These funds are lifelines for rural families, supporting education, healthcare and necessities. According to Bangladesh Bank, remittances also bolster foreign reserves, which stood at $21.34 billion 鈥� based on BPM6 鈥� on 30 December 2024, providing a crucial buffer against trade deficits.
The risks, however, are mounting. The US military bases in the United Arab Emirates, Qatar, and Saudi Arabia could become targets for Iranian retaliation if tensions escalate further. Meanwhile, the unpredictability of US foreign policy as seen during the Trump administration only deepens the uncertainty. A direct conflict could trigger economic slowdowns in Gulf nations, particularly in sectors such as construction, hospitality and domestic work, where Bangladeshi migrants are heavily employed.
Attacks on critical infrastructure, similar to the 2019 drone strikes on Saudi Aramco, could lead to mass layoffs. The International Organisation for Migration warns that workers in conflict zones such as Syria, Lebanon, and Yemen are especially vulnerable. The collapse of Bashar al-Assad鈥檚 regime could force many to flee, compounding the economic strain. According to BMET data, over 25,000 Bangladeshi workers are currently employed in Lebanon alone, a country already struggling with economic collapse.
For families in Bangladesh, even a modest decline in remittance inflows can be devastating. A 2023 KNOMAD report found that remittances reduce poverty by 30 per cent in rural areas. Disruptions due to Middle Eastern instability could push millions into poverty, exacerbating inequality and increasing pressure on government support systems.
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Dependence on oil
BANGLADESH imports over 8 million metric tonnes of crude oil annually, with 80 per cent sourced from the Middle East, particularly Saudi Arabia and the UAE. This reliance leaves the country highly exposed to fluctuations in supply, especially if key shipping routes such as the Strait of Hormuz 鈥� through which a third of the world鈥檚 oil passes 鈥� are compromised.
The global energy market remains volatile. Sanctions on Russian oil, coupled with Ukraine鈥檚 ongoing counteroffensive, have already led to significant price fluctuations. In recent months, oil prices have surged, adding financial pressure on import-dependent economies like Bangladesh. During the 2019 US-Iran standoff, crude oil prices soared by over 20 per cent in a matter of weeks. A similar escalation now could push Bangladesh鈥檚 import bills even higher, worsening an already substantial trade deficit, which reached $22.43 billion in the 2023-24 fiscal year.
Domestically, rising oil prices translate into higher transportation and electricity costs. This disproportionately affects low-income households and industries such as textiles, which account for 84 per cent of Bangladesh鈥檚 export earnings. The BP Statistical Review of World Energy (2023) estimates that every $10 increase in crude oil prices could cost Bangladesh an additional $1 billion in import expenses annually.
The economic consequences extend beyond direct costs. Bangladesh鈥檚 energy policy relies on subsidies to keep fuel prices affordable. A sudden price surge could force the government to either cut subsidies 鈥� leading to inflation 鈥� or expand borrowing, deepening economic strain. The IMF recently warned that Bangladesh鈥檚 foreign exchange reserves are dangerously low, covering only four months of imports, making the economy highly vulnerable to external shocks.
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Shrinking remittances, rising energy costs
WHEN remittance inflows decline while energy prices surge, the combined impact on Bangladesh鈥檚 economy is severe. Reduced remittances shrink household consumption, a key driver of domestic economic activity, while higher oil prices escalate production costs, threatening exports and employment. The government鈥檚 fiscal burden would also increase as it struggles to stabilise fuel prices while supporting returning migrant workers.
During the Covid pandemic, over 500,000 Bangladeshi workers were forced to return home, overwhelming the job market. A similar wave of job losses from the Middle East could trigger widespread unemployment and social instability, placing further pressure on an already strained economy.
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Strengthening economy
REDUCING dependence on the Middle East requires strategic economic adjustments. Expanding labour markets in East Asia, Europe and Africa could provide alternative employment opportunities. Malaysia, for instance, has recently reopened its labour market to Bangladeshi workers, with 100,000 placements expected by 2025.
Energy diversification is equally critical. Increased investment in renewable energy and LNG imports from countries like the US and Australia could help mitigate reliance on Middle Eastern oil. Bangladesh鈥檚 renewable energy policy aims to generate 10 per cent of its electricity from renewables by 2030, but progress needs to accelerate to ensure long-term sustainability.
Diplomatic engagement must also be prioritised. Strengthening bilateral ties with GCC nations can help secure job protections for Bangladeshi workers during regional crises. Likewise, negotiating stable energy agreements could safeguard oil imports in times of disruption.
On the financial front, the government should consider establishing a Remittance Stabilisation Fund to support families during economic downturns. Expanding financial inclusion through mobile banking could further ensure faster, more secure remittance transfers, reducing vulnerabilities during crises.
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Path forward
MIDDLE Eastern conflicts present a formidable challenge to Bangladesh鈥檚 economic stability, threatening its two crucial lifelines: remittances and energy security. As Iran-Israel tensions escalate and regional instability deepens, the risks to Bangladeshi workers and the broader economy are undeniable. However, by diversifying labour markets, investing in renewable energy, and strengthening diplomatic ties, Bangladesh can build resilience against external shocks.
As the nation strives for middle-income status, safeguarding its migrant workforce and ensuring energy security must remain at the forefront of economic planning. A proactive approach today could determine whether Bangladesh weathers future crises or succumbs to their pressures.
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Muhammad Jahid Hasan is a freelance journalist.
