Bangladesh’s poverty situation has come under renewed pressure, with the number of people living in poverty estimated to have increased by around 1.4 million last year. The country had been expected to make some progress in reducing poverty in 2026, but the ongoing conflict in the Middle East has created fresh economic risks that could significantly weaken that prospect.

According to a World Bank assessment prepared in mid-June, around 1.7 million people could have moved out of poverty in Bangladesh in 2026 if there had been no war in the Middle East. With the conflict affecting energy markets, supply chains and domestic production, that figure could fall to roughly 500,000.

That would mean an estimated 1.2 million people could lose the opportunity to escape poverty because of the conflict, the World Bank warned. The assessment was conducted as part of a proposed project intended to provide budget support to the government.

The World Bank attributed the increase in poverty last year partly to persistently high inflation, weak employment conditions and limited growth in household incomes. Although the economy has continued to generate growth, rising living costs have reduced the benefits reaching ordinary households.

The Middle East conflict has added another layer of pressure. Higher fuel prices, shortages of gas for industrial production and disruptions to fertiliser manufacturing are affecting transport, agriculture, commodity prices and household earnings. If the disruption persists, the country could face the loss of around 600,000 jobs, according to the World Bank’s assessment.

Inflation remains a major concern

The impact of the conflict could become particularly visible through higher prices. The World Bank estimates that rising prices could account for around 10 per cent of the increase in poverty in Bangladesh this year.

If higher energy costs are gradually passed on to consumers, inflation could rise by more than 0.5 percentage points. That would increase operating costs for transport services, power generation and industries, with businesses likely to face higher production expenses.

The pressure could eventually spread to food and other essential goods. For low-income households, even relatively small increases in the prices of everyday necessities can have a significant effect because a large share of their income is spent on basic consumption.

Finance and Planning Minister Amir Khosru Mahmud Chowdhury, however, has said that inflation fell below 9 per cent in July. He has also argued that inflation could have declined further if there had been no conflict in the Middle East.

Energy dependence leaves Bangladesh exposed

Bangladesh’s energy sector is particularly vulnerable to developments in the Middle East. More than half of the country’s primary energy supply comes from natural gas, while domestic gas production has fallen by around 15 per cent from its peak level in 2016.

At the same time, Bangladesh remains heavily dependent on imports for meeting its energy needs. Around 60 to 65 per cent of imported crude oil and approximately 55 to 60 per cent of liquefied natural gas come from the Middle East.

The conflict has already disrupted the international energy market. Five of Petrobangla’s six LNG supply agreements have been declared subject to force majeure amid the instability.

Prices in the spot LNG market have risen to between US$24 and US$28 per million British thermal units, more than twice previous levels. Bangladesh also had to pay more than US$24 per unit for two LNG cargoes scheduled for delivery in September.

Higher energy costs are creating pressure on the government’s finances as well. The World Bank estimates that energy subsidies could rise to 2.8 per cent of gross domestic product in the 2025-26 financial year. Overall subsidy pressures could reach between US$2.5 billion and US$4.8 billion.

Such additional expenditure could make it harder for the government to maintain spending on other priorities, including social protection programmes.

Agriculture faces another round of pressure

The energy crisis is also affecting agriculture, a sector on which around 40 per cent of Bangladesh’s population depends directly or indirectly.

Small farmers are likely to be particularly vulnerable if supplies of fertiliser and other agricultural inputs become more expensive or difficult to secure. Bangladesh already uses an average of 391.9 kilograms of fertiliser per hectare, more than twice the global average.

Natural gas is also required for domestic fertiliser production. Five of the country’s six urea fertiliser plants have already had to suspend production because of gas shortages.

Urea prices have increased by around 30 per cent, while the World Bank has warned that prices could potentially double if the disruption continues. Higher fertiliser costs would raise farmers’ production expenses and could eventually add to pressure on food prices.

Employment under growing strain

The effects of the Middle East conflict are also becoming visible in the employment market, according to Professor Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue.

He said new gas connections were not being provided to industrial facilities, while some factories had reduced working hours. Others had been forced to suspend operations because of fuel shortages.

Factory closures and job losses can have effects well beyond individual workers. Reduced production can weaken demand across supply chains, while fewer working hours and lower household incomes can further suppress consumer spending.

Professor Rahman said recent factory closures and job losses illustrated the seriousness of the situation. The World Bank’s estimate that around 600,000 jobs could be at risk, he said, underlined the scale of the potential impact.

Healthcare costs could also rise

The pressure is not limited to industry and agriculture. Energy shortages and disruptions to international supply chains are also increasing costs in the healthcare sector.

Bangladesh has around 19,000 government health centres and approximately 6,200 private hospitals and clinics. When electricity supplies are disrupted, private healthcare facilities often have to rely on generators, increasing their fuel and operating costs.

The pharmaceutical industry is also exposed to international supply disruptions. Around 250 medicine manufacturers in Bangladesh import raw materials from overseas. More than 90 per cent of hospital equipment is also dependent on imports.

As a result, higher international energy prices and supply-chain disruptions can increase the cost of medicines, medical equipment and healthcare services.

The combined pressures are emerging at a difficult time for Bangladesh. The country entered 2026 after an estimated 1.4 million additional people fell into poverty in 2025, while high inflation and weak employment continued to constrain household incomes.

The World Bank’s assessment suggests that the Middle East conflict could further delay poverty reduction by pushing up energy and production costs, weakening employment and raising prices. If the disruption persists, the effects could spread across households, businesses, agriculture, healthcare and government finances, making the country’s economic recovery more difficult.